INSURANCE BANKING INVESTMENT - Suncorp Group · 2018. 5. 21. · Banking 229 157 45.9 General insurance 211 169 24.9 Life insurance (after tax and excluding policyholders’ interests)

INSURANCE BANKING INVESTMENT

CONCISE RE PORT

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Contents

Financial Highlights 1

Chairman’s Letter to Shareholders 2

Managing Director’s Report 6

Board of Directors 14

Executive Committee 15

Group Overview 16

Banking 18

General Insurance 21

Life, Super and Managed Investments 22

Corporate Governance 24

Directors’ Report 28

Profit & Loss Statement 32

Balance Sheet 34

Statement of Cash Flows 36

Notes to the Concise Financial Report forthe year ended 30 June 2000

1 Basis of preparation 38

2 Changes in Accounting Policy 38

3 Operating revenue 40

4 Operating expenses 41

5 Segment information 42

6 Abnormal items 45

7 Dividends 45

8 Converting capital notes 46

9 Directors’ and senior executives’ emoluments 47

10 Options 49

Directors’ Declaration 50

Independent Audit Report 51

Shareholder/Noteholder Information 52

Shareholder/Noteholder Key Dates 56

How to contact us IBC

Core Purpose

Suncorp-Metway LtdABN 66 010 831 722

CONCISE REPORT For the Financial Year ended 30 June 2000

The Concise Report incorporating the financial statements andspecific disclosures required by Accounting Standard AASB 1039has been derived from the consolidated entity’s consolidatedfinancial report for the financial year. Other information includedin the Concise Report is consistent with the consolidated entity’sconsolidated financial report.

The Concise Report does not, and cannot be expected to, provideas full an understanding of the financial performance, financialposition and financing and investing activities of the consolidatedentity as does the full financial report.

A copy of the 2000 Annual Report, which includes theConsolidated Financial Report and the independent audit report,is available to all shareholders, and will be sent to shareholderswithout charge upon request.

The 2000 Annual Report can be requested by telephoning (07) 3835 5797 and by the internet atwww.suncorpmetway.com.au

Our Core Purpose is to make it far easier for customers to manage their finances

so that they can realise their dreams and protect the things they hold dear

Financial Highlights

Net profit up 36% to $335 million

Annual dividend up 2c to 46c

Earnings per share up from 49.2c to 69.5c (fully diluted)

Return on equity up from 12.1% to 16.4%

Total assets up 9% to $23.4 billion

Long term debt credit rating upgraded by Moody’s from Baal to A3

Shareholders & noteholders Total number: 240,000

Total no of employees: 4450 FTE

1

500

400

300

200

100

0

Operating Profit after tax($m)

June 97*

* 12 months Metway, 7 months Suncorp, QIDC

150

233247

335

June 98 June 99 June 00

6000

5500

5000

4500

4000

Staff Numbers(FTE)

Dec 96

5984

5341

4762

4450

4708

Jun 97 Jun 98 Jun 99 Jun 00

100

80

60

40

20

0

Dividends/Earnings per share (c)(fully diluted)

1996/97

41.2 4045.8

44

49.2

44

69.5

46

1997/98 1998/99 1999/00

Earnings Dividend

Credit Ratings

Short Term Long Term Claims Paying Claims Paying

General Insurance Life & Super

Standard & Poor’s A-2 A- A- A-

Moody’sBank Deposits P-2 A3 n/a n/aSenior Debt P-2 A3 n/a n/a

Fitch IBCA F 1 A A+ A

2

Dear ShareholderThe year to June 2000 was a good period for your company.

Suncorp Metway recorded a 36 percent rise in net profit

to $335 million, which is a healthy profit increase by any

standards, and we also achieved some major operational

changes that leave the company well positioned for

growth.

Most importantly, I am pleased to tell you we have been

able to increase dividends for the first time since the half

year to June 1997.

Dividends

Directors have declared a final dividend of 24 cents per

share, up two cents on 1999, taking dividends for the full

year to 46 cents per share. The dividend is fully franked,

albeit at 34 percent for the final 24 cents. This dividend

also is payable on the 100 million shares which were

transferred from government ownership to private

ownership through the exchange of Series One

exchanging instalment notes in November 1999. These

shares previously were subject to a dividend subordination,

which no longer applies.

So you can see that it’s a pretty good achievement to be

able to lift the dividend, and it is a reflection of the fact

that we are achieving the profit targets we have set for

ourselves since our merger in December 1996.

Growth in Profits

The financial strength of the company has improved

dramatically during the past three and a half years as a

result of the extensive restructuring efforts which have

been undertaken by management.

Our earnings per share figure, calculated as though all our

convertible notes and options had converted to shares,

has risen strongly, from 23 cents for the half year to June

1997 (our first full half year as a merged group), to 37.6

cents for the last half of the 2000 financial year. For the

full year to June 2000, basic earnings per share rose from

49.2 cents to 69.5 cents.

Merger Completed

It is with some satisfaction that I can declare in this letter

that the careful merging of the three founding partners –

Suncorp, Metway and QIDC – into the new Suncorp

Metway, has now been completed.

Chairman’s Letter to Shareholders


As you can see from these accounts, the company

increased earnings across the three main operating

divisions. The main reasons for the profit rise were a sharp

fall in operating expenses, and excellent investment

returns.

Operating expenses fell from $602 million to $545 million

(adjusted for Life and Superannuation policyholders’

interests), mainly because of a reduction in one-off costs

associated with our internal restructuring, which is good

to see.

Our investment returns were again strong, reflecting the

underlying performance of the share market, magnified

due to an excellent performance by our investments team.

While the All Ordinaries Accumulation Index increased by

15.4 percent, our equities portfolio returned 21.2 percent

and the investment of our General Insurance shareholder

funds, including property, returned 19.2 percent. While

this represents an increase in accounting profits, it is

better regarded as a once-off increase in the net worth of

the company, rather than a profit that we can consistently

rely on year after year.

Leaving aside the reduced expenses and strong investment

returns, the growth of our business was somewhat slower

than we would have liked, with increases in lending and

3

Profit Overview

The table below provides a detailed breakdown of the profit result.

Year Ended Jun-00Jun-00 Jun-99 vs Jun-99

$m $m %

Banking 229 157 45.9

General insurance 211 169 24.9

Life insurance (after tax and excluding policyholders’ interests) 30 25 20.0

Other activities 5 5 -

Operating profit before amortisation of goodwill, abnormal items and income tax 475 356 33.4

Amortisation of goodwill (10) (10) -

Operating profit before income tax and abnormal items 465 346 34.4

Income tax attributable to operating profit (excluding policyholders’ interests) (130) (87) 49.4

Operating profit after income tax and before abnormal items 335 259 29.3

Abnormal items after income tax - (12) n/a

Operating profit after income tax and abnormal items 335 247 35.6

At the announcement of our merger in 1996, it was clear

that wide-ranging measures were needed to cut out

inefficiencies and forge a new group with the systems,

processes, staff and discipline required to compete in the

rough and tumble of the modern financial services sector.

That has now been achieved. The brands have been

unified, the product ranges have been blended and the

branch networks streamlined.

This has been a very big task, and unusual in the financial

services sector because it has been accomplished without

significant disruption to the customer base and without

damaging the value of the company’s franchise.

The completion of the restructuring programs has created

a strong platform for growth in the future.

Our efficiency ratios have improved significantly, and the

company is now in a position to be able to compete

effectively.

The profit result for 2000 reflects the completion of the

restructuring process.


premiums constrained by a number of factors. For a start,

the restructuring of the company meant that staff were

focused more on internal change than growth initiatives.

Secondly, the Goods and Services Tax caused reductions in

net premium income, and hurt businesses such as car

leasing, because people deferred car purchases. And

thirdly, our business strategy has been to maintain margins

rather than chase business volumes at unprofitable levels,

so we decided to let some business pass.

The fact that we were able to maintain business volumes

and hold market share in most segments is a reasonable

outcome given the circumstances.

Revenue and Assets

This year the accounting standards have changed so that

all life insurance income and expenditure is included in the

profit and loss account and assets and liabilities are

included in our balance sheet. It is interesting to note that

including life insurance premiums, our total revenues were

$3.5 billion and total assets were $26 billion.

Whilst the new accounting standard is an improvement on

the last one, which omitted the figures altogether, the

new one also has a problem in that the life insurance

assets for which we are responsible are intermingled with

the assets we own. To understand the real position for

shareholders is difficult for even an expert. It seems a pity

the accounting standards board does not revert to the

practice before accounting standards were invented, of

including life insurance statutory funds and liabilities as a

single line on the balance sheet with a note setting out

adequate details. Such a system was simple and kept

everyone fully informed.

Outlook

We are now moving into a new growth phase with a

determined approach and with the very strong enthusiasm

of staff. New initiatives that exploit our Allfinanz strategy

are being implemented, and should deliver good growth

in lending and new premiums. The results so far are

encouraging. The Managing Director, Steve Jones, will say

more about our plans in that regard.

As I said earlier, we cannot be certain that the current year

will bring a continuation of the excellent investment

returns of the past. However, I can say with confidence

that the major one-off expenses of the merger are behind

us and any new expenses will be in line with growth and

investment in the business.

Therefore, the combination of increased business volumes

and reduced one-off expenses should deliver a further

increase in profits in the current year.

The Board

During the year, two of our directors resigned to pursue

other business interests. Patricia Cross had joined the

Merger Planning Committee in August 1996 and then

became a member of the board on our merger date –

December 1, 1996. With her general ability and

experience as a banker, Patricia made a very valuable

contribution to the group. Geoff Tomlinson only served on

the board for a short time but was helpful to us in areas

such as our investment products. In August this year, the

former managing director of Caltex Australia Limited,

Dr Ian Blackburne, was appointed to the board. His

experience in management and in the retail sector will be

particularly helpful to the board in the future.

Conclusion

The process of managing and operating a large and

diversified financial services company like Suncorp Metway

relies on the help and talent of a great many individuals

throughout the group. The successful conclusion of our

restructuring, and the strong profit results explained in this

report are the results of the efforts of all our staff and the

leadership provided to them by Steve Jones and his

executive team. On behalf of the board I would like to

thank the management team and all the staff for their

fine contribution.

I would also like to thank my fellow directors for their

support, and most importantly, I would express my

gratitude to all of the shareholders and noteholders for

their on-going interest in the company.

4

R John Lamble, AO Chairman

5

PHO

TO C

OU

RTES

Y O

F TH

E SU

ND

AY

MA

IL

Suncorp Metway makes a major contribution to the community through sponsorships and fund raising activities. The Bridge to

Brisbane Fun Run is one such event, which this year raised $140,000 for the Hear and Say Centre, which helps deaf children to

hear through the use of cochlear implant technology. A record 12,000 runners and walkers, including 1000 Suncorp Metway staff,

turned out for the 12kms run. Another of the company’s major sponsorships is the Youth Enterprise Trust, which is undertaking

excellent work to help the disadvantaged and troubled young people. The Royal Flying Doctor Service, Salvation Army, Royal

Children’s Hospital and the Queensland Cancer Council also were important parts of the group’s sponsorship program, as well as

rural events such as Queensland’s largest agricultural and machinery show, the Suncorp Metway Ag Show. In the sporting arena,

Suncorp Metway supported the North Queensland Games and Queensland cricket.

Supporting the community

Managing Director’s Report

I am very pleased to report on the company’s progress

and results for the year ended June 2000.

Three important milestones were achieved:

• The last aspects of the merger were completed

following three years of tremendous effort by staff

and managers across the company

• Profits increased by 36 percent as merger-related

costs fell away and the company’s operating

performance continued to improve

• Dividends were increased by two cents, reflecting

the profit improvement and directors’ confidence in

the company’s prospects

In this report I will review the year’s operating

highlights, the performance of the main lines of

business and then explain our plans for moving forward

in the current year.

Group-level Highlights

The first quarter of the financial year saw completion of

the major change programs we had initiated 18

months before to improve efficiency and build a

competitive cost base.

The main programs were:

• Transformation, which comprised 1450 ideas

nominated by staff to streamline processes and

operations and deliver savings worth around $180

million p.a.

• One Brand, which amalgamated the three product

lines, branch networks and brand names of the

merger partners to create Suncorp Metway.

Combining neighbouring branches reduced the

network from 221 branches at the time of our

merger in 1996, to 137 at completion of One Brand.

6

Dear Shareholder


7

There are now 140, as we have since expanded the

rural network. The net effect is more branches for

customers than had been available under the separate

brands and lower costs for the company.

I’m happy to report that these programs have achieved

their goals, significantly improving our operations and

creating a much leaner and more competitive company.

Our internal measures show that through the whole

Transformation and One Brand programs, the group

lost around 1 percent of its retail customer base. This

compares very favourably to the typical merger where

the loss is around 5 percent. While we’re never happy

to lose customers, it’s good to see the loss was

minimised.

The distractions of the amalgamation did however

place a drag on growth during the year. For example,

the loan base grew 7 percent over the year, lagging the

industry average of 12 percent. We are now able to

focus fully on profitable growth and expect a return to

target rates of growth.

Year 2000

The next challenge in the year was the Y2K ‘millennium

bug’. Our extensive rectification programs worked well

and all systems went through New Year without a

hitch. It was a costly effort, but as a financial services

provider, we wanted to be certain there was no risk to

customers’ funds or records.

Ratings Upgrade

The significant improvements that have been made

during the past three years were independently

confirmed in July 2000, when Moody’s Investors Service

announced an upgrade in our credit ratings. Our long

term debt rating increased from Baa1 to A3.

Credit ratings are used by investors as a guide to the

quality and security of a company’s debt. An increase in

our credit ratings is significant. Investors will see us as

more secure and will be prepared to accept lower

interest rates on our bonds and commercial paper. That

lowers our cost of funds.

Employee Satisfaction

The most pleasing non-financial result for the year was

the very good progress made in addressing the needs

and concerns of staff and engaging them in our drive

to reach world’s best practice in financial services.

I’ve said many times that all of the positive results

achieved so far are due to the excellent work and

dedicated effort of staff and managers. Today’s

competitive environment in financial services means

staff are frequently under pressure and facing

conflicting demands. To make Suncorp Metway a great

company, we need resourceful staff who understand

the group strategy and their part in it, and are

committed to making it happen.

During Transformation we began to survey the views of

our employees and found we ranked below the

Australian average on those practices that determine

employee commitment and motivation. While some of

the result was due to the major changes and job

reductions under way at the time, it nonetheless

needed improving. Managers across the company set

out to change those practices that were key to lifting

satisfaction.

We repeated the survey late in the 2000 financial year

and it is pleasing to report there was substantial

improvement in all parts of the company. The results

show we have moved from well below the average for

Australian companies to slightly above it. From here we

aspire to reach the standards of the best in the world.

In line with this we are continuing the policy of

rewarding staff with a grant of shares when the

company exceeds its targets for the year. This year staff

will receive $750 worth of the company’s shares. Note

that the shares are purchased on the open market and

do not dilute the interests of existing shareholders.


8

Profit Analysis

The 36 percent increase in profit and 2 cent rise in

dividends are pleasing results for the year.

Return on shareholders’ equity, on a fully diluted basis,

increased from 12.1 percent to 16.4 percent. This is an

excellent increase and takes us above our minimum

target of 15 percent. The main reasons for the profit

rise were a sharp fall in operating expenses and

excellent investment returns.

Operating expenses fell by $57 million, from $602

million to $545 million (adjusted for Life and

Superannuation policyholders’ interests), mainly

because there were far fewer one-off costs associated

with the restructuring of the last two years. Altogether,

one-off costs (including the Y2K program) fell from $82

million to $31 million.

Investment returns were very strong, driven by

continued increases in equity values, and relatively

stable long term interest rates. The strong market

performance was magnified by our investments team

who, for the second year running, exceeded

benchmarks through excellent portfolio management.

The All Ordinaries Accumulation Index rose by 15.4

percent in the 1999/2000 financial year, while our

equities portfolio returned 21.2 percent.

I will now turn to the results on a divisional basis.

Banking

The banking division achieved the largest profit

increase in the group, lifting pre-tax earnings by

46 percent to $229 million.

Operating expenses were reduced by 18.2 percent to

$338 million, with big reductions in computer

expenses, occupancy costs and staff costs. These

included one-off costs which fell from $57 million last

year to $19 million in the year to June 2000.

Operating income was steady at $593 million. Total

loans, advances and other receivables grew by 7.4

percent to $18 billion, compared with industry growth

of about 12 percent.

During the year we had the dual objectives of

maintaining margins and growing the loan book at the

same rate as the overall market. This would have been

a very good outcome, as banking industry margins

have been steadily declining over the years due to

deregulation and technology.

We were successful in maintaining margins – they were

steady at 2.48 percent for the 18 months from

December 1998. But we missed the mark on the

second score, asset growth. By choosing not to chase

lower margin business, we ended up growing more

slowly than our target level.

Consequently, we are reviewing our efforts to achieve

greater growth. It is encouraging to note that in the

last two months of the year, record levels of new

business in housing and in business banking were

Banking profit contribution June 00 June 99 change$m $m %

Net interest income 475 470 1.1

Other operating income 118 120 (1.7)

Total operating income 593 590 0.5

Operating expenses (338) (413) (18.2)

Net operating profit 255 177 44.1

Bad and doubtful debts (26) (20) 300

Contribution to profit from Banking 229 157 45.9

achieved. A good portion of this was due to a rush of

pre-GST activity. A corresponding let-down is expected

in the current year and how long it lasts will be a key

factor in industry growth for the year.

In terms of overall efficiency of the banking business,

the best measure of pure efficiency is the cost-to-assets

ratio and ours is among the lowest in Australia. The

cost-to-income ratio is another important measure, and

by the second half of the year it was down to 52.7

percent, excluding one-off expenses. This is excellent

progress and puts the company on par with the major

banks. This means our focus for further improving the

cost-to-income ratio is on growing income rather than

more cost reduction.

General Insurance

Profits in the General Insurance division increased by 25

percent to $211 million during the year.

We find it helpful to think of the insurance result in

two parts: the insurance trading result, and the

investment income on the shareholder’s funds that

provide the capital to underpin the business.

• First is the insurance trading result, which increased

by 51 percent to $106 million.

This is the combination of the profits (or losses) on the

insurance underwriting operations, plus the investment

income earned on the funds that are held in reserve to

meet future claims. While growth in premium revenue

was modest, our insurance trading result rose strongly

because we had good claims management and

excellent investment returns.

The strong trading profit was achieved despite the

impact of the Goods and Services Tax, which caused

net premium income to be approximately $8 million

lower than it would have been. Policies written before

1 July and continuing thereafter attract GST. So for

those policies that straddled 1 July, a portion of the

premium revenue that would have been income to the

company instead became GST payable to the

government. While premium rates were adjusted to

reflect this, it was not possible to collect all of the GST

in the changeover year.

Nevertheless, premium revenue did increase by 7.9

percent to $739 million. An important driver was an

increase in CTP premiums from 1 July 1999, when they

rose by $40 to $286 for most registered vehicles. The

increase was in response to a sharp increase in the

number of claims the industry had been receiving.

Fortunately, this spike in claims has since stabilised.

Claims expense increased by just 4.4 percent during the

year, to $684 million, and the claims cost was similarly

affected by the Federal Government’s tax reform

initiatives. Claims costs would otherwise have been

$15 million lower. If this impact were removed, then

the increase in claims costs would have been just over

2 percent.


9

General Insurance profit contribution June 00 June 99 change$m $m %

Net premium revenue 739 685 8.7

Claims expense (684) (655) 7.9

Reinsurance and recoveries 83 115 (27.8)

Net incurred claims (601) (540) 4.4

Operating expenses (178) (176) 1.1

Underwriting result (40) (31) 29.0

Investment revenue (technical reserves) 146 101 44.6

Insurance trading result 106 70 51.4

Other income 7 3 133.7

Investment revenue (shareholder’s funds) 98 96 2.1

Contribution to profit from General Insurance 211 169 24.9

1 0

Greg O’Brien from Albany Creek is a busy builder who likes his banking and insurance to be hassle free. Long established

customers with Suncorp Metway, Greg and his wife Mandy, pictured here with their children Samantha, Sophie and Zack, know

that at Suncorp Metway they can have all their business and personal financial needs dealt with by the one person. As Premier Plus

customers, the O’Briens have 12 products with the company drawn from across the product range.

Suncorp Metway financial planners are helping to make sure Greg and Mandy have a prosperous future by developing a financial

plan that will identify their needs and goals.

Easy to do business with


Revenue from reinsurance recoveries fell by $32 million

compared to last year, reflecting the fact that there

were very few major events giving rise to circumstances

where we could recover insurance payouts from our

reinsurers.

Investment income in the Insurance Trading Result

increased by 45 percent to $146 million. This is from

investment of the funds that are held in reserve to

meet future insurance payouts. The funds are mainly

invested in fixed interest securities. In the previous year

to June 1999, rising interest rates caused the capital

value of the fixed interest portfolio to fall, so

investment returns suffered. In contrast, long term

interest rates in the year to June 2000 were relatively

stable, so investment returns were much improved

compared to the June 1999 year.

• The second portion of the general insurance profit is

the investment return on shareholder’s funds.

These funds are mainly invested in shares, and as most

of our shareholders will know, the equities markets

performed very strongly, particularly in June. Investment

income, which includes realised and unrealised gains,

increased by $2 million to $98 million during the year,

maintaining the excellent profits of the previous year.

As I noted earlier, our investments team beat the

market through careful stock selection and added more

than $20 million of additional returns in our equities

portfolio. While we are confident they will continue to

perform better than the market, we know and expect

that market returns will fluctuate from year to year.

CTP deregulation

Since the year end, the Queensland Government has

proceeded with its plans to introduce partial price

deregulation to the Compulsory Third Party insurance

scheme.

Each quarter, beginning on 1 October, licensed CTP

providers will lodge with the Motor Accident Insurance

Commission (MAIC), the prices at which they propose

to offer CTP for the following three months. These

prices must fall in a range that will be set by MAIC

from time to time.

Prices for the first quarter have been released, with

most insurers pitching their prices close to the

previously regulated level. That price was based on

actuarial assessments of the risks and costs involved in

the scheme.

Suncorp Metway emerged as the most competitively

priced provider in the market. This is a positive start, as

it reaffirms our view that Suncorp Metway, with a 56

percent share of the market, is best placed to offer the

most competitive premium rates and service in

Queensland.

As the deregulation has only just started it is too early

to predict our competitors’ strategies going forward.

While price deregulation brings with it threats and

challenges, it also offers new opportunities to improve

our CTP product offerings and the quality of that

business. We are focused on making the most of these

opportunities in the current year.

Life, Superannuation and Managed Investments

This division increased profit by 20 percent to

$30 million, with the improvement coming from higher

planned profit margins and, once again, strong

investment performance.

While the profit increase was very good, growth in the

division was well below our targets. Like Banking, the

distractions arising from the change programs slowed

business growth. Specifically, new business referrals

from branches to financial advisers fell below plan.

The division has been through a complete overhaul

during the past two years, covering the distribution

network, product range and investment mandates. The

products now have features, pricing and performance

levels that make them much more competitive and

attractive to investors. The distribution network has

been expanded by adding salaried financial advisers to

almost all our branches.

The costs of these changes are reflected in the

experience losses which increased to $2 million, as the

costs were allocated to a smaller than planned book of

business.

1 1


1 2

Life, Super and Managed Investments profit contribution June 00 June 99$m $m

Premiums net of reinsurance 529 560

Investment income 319 229

Total income 848 789

Policy payments net of reinsurance recoveries (475) (591)

Increase in policy liabilities (231) (69)

Expenses (67) (70)

(773) (730)

Operating profit before income tax 75 59

Income tax expense attributable to operating profit (45) (34)

Contribution to profit from life insurance activities, after tax 30 25

The tax reform initiatives introduced by the Federal

Government, including the application of corporate tax

rates to life insurance operations, also adversely affected

the division’s results.

While price increases offset some of the impact, the net

cost was $4.25 million. This is a once-only cost.

Investment returns on shareholder’s funds were the

main reason for the profit increase, rising by 57 percent

to $11 million (excluding Life and Superannuation

policyholders’ interests).

As in General Insurance, this was due to strong returns

in the equity and fixed interest markets, plus the great

performance of our investments team.

Plans for the current year

The company’s plans for the year ahead are all about

building profitable growth and improving customer

satisfaction. This is a welcome change from the last

few years where a tremendous amount of time has

necessarily gone into our merger and Transformation

programs.

There are opportunities in each line of business and the

product managers and distribution teams are keenly

pursuing them. At the Group level, the biggest single

opportunity before us is to increase the business we do

with our 2.3 million customers. Capturing all of their

banking, insurance and investment business is our

‘Allfinanz’ objective.

To put Allfinanz into practice, our marketing and

distribution teams have developed a four pronged

approach to sales and customer service.

It’s called Suncorp Metway Diamond Plus and has

four objectives, or the four points of the diamond.

Achieving them will enable staff to increase both sales

and customer satisfaction.

Value Added Linkage

Needs Assessment

CrossSell

Cost toServe


The first objective is to undertake a needs analysis with

each customer and identify where we can genuinely

help them manage their finances better, or at lower cost.

From this stems the second objective, the sale of

products that can help customers earn more, save

more, better protect their assets or manage their

finances with less time and trouble.

Third is to educate the customer on the easiest, lowest

cost ways they can carry out their transactions. That

means, for example, showing customers who come

into the branches to withdraw money, how simple and

convenient it is to use the automatic teller machine, or

to transfer money on the internet or through the call

centre.

Fourth is to build value-added linkages with the

customers. For example, a customer who has her salary

paid into a Suncorp Metway account can have her

mortgage paid automatically from the account. This

both helps her and strengthens the relationship with us.

Suncorp Metway Diamond Plus is a means for

developing a full relationship with each customer,

rather than simple product flogging. Staff have

embraced it, for that reason, and we expect it to be

the basis of our Allfinanz marketing in the years to

come.

Alliances and Acquisitions

In the year ahead we will continue developing our

alliances for growing our interstate business.

Progress has been very good so far, particularly with

our LJ Hooker alliance, through which mobile loans

consultants are serving the LJ Hooker real estate

network of 500 offices across Australia. Our Pivot

alliance, which has Suncorp Metway agribusiness

bankers in Pivot’s Prescription Farming fertilizer centres

in regional Victoria, is now reaching the sales levels

that will trigger the addition of more lenders to the

Pivot network.

We are also actively investigating a number of different

acquisition opportunities that offer significant potential.

As always, we are determined that any acquisition must

pass strict tests to ensure it builds shareholder value.

Outlook

In the year ahead our overall expectation is for good

growth in each of the main lines of business.

In a few sectors, like property development finance, it

will be prudent to grow more slowly because of the

stage in the business cycle.

Insurance trading results should again be strong, in

both trading operations and investment management.

We cannot, of course, predict the market’s movement.

The company’s cost position should remain very good.

Normal inflation in the cost base will be offset by the

absence of one-off merger costs that featured in the

last two years. Thus, any increase in costs, should they

arise, would be due to investments in expansion.

There is a question mark over the economy due to

factors such as the impact of the Goods and Services

Tax, and increased interest rates. It is difficult to predict

whether any economic lull will be short lived, or a

longer downturn with significant implications for

business growth.

That said, provided economic conditions in the year

ahead are fairly normal, we look forward to further

improvement in the company’s performance and

profitability.

1 3

Steve Jones Managing Director

Board of Directors

1 4

R John Lamble AO BSc(Hons), Hon D Univ(UNSW), FAIIChairman, Non-executive Director

Mr Lamble, 69, has been a director and Chairman since 1December 1996. His principal career was as Chief ExecutiveOfficer of NRMA Insurance Limited from 1968 to 1992. MrLamble is Chairman of Perpetual Trustees Australia Limited anda director of Email Limited.

Martin D E Kriewaldt BA, LLB(Hons), FAICDDeputy Chairman, Non-executive DirectorMr Kriewaldt, 50, has been a director and Deputy Chairmansince 1 December 1996. Mr Kriewaldt was formerly a partnerin law firm Allen Allen & Hemsley. He is Chairman of AirtrainCity Link Limited and Opera Queensland Limited and a directorof GWA International Limited and Orogen Minerals. MrKriewaldt is a member of the University of Queensland Senate.

W Steven Jones MBA (Hons), BEconManaging DirectorMr Jones, 48, has been a director since 6 January 1997. MrJones was Managing Director of the ANZ Banking Group (NewZealand) Limited from April 1995 to November 1996 andSenior General Manager ANZ Melbourne, from 1993 to 1995,responsible for Australian Retail Banking and ANZ FundsManagement. Previously with McKinsey and Co, he hadsignificant experience consulting on competitive strategygrowth opportunities and merger management to banks,insurers and industrial companies. (see photo opposite page)

Ian D Blackburne MBA, PhD, BSc (First Class Hons)Non-executive Director(appointed 3 August 2000)Dr Blackburne, 54, is Chairman of the Royal Botanic Gardensand Domain Trust and a director of CSR Limited and AirservicesAustralia. He recently retired as managing director of CaltexAustralia Limited after having spent 25 years in the petroleumindustry.

Rodney F Cormie BCom, AAUQ, ASA, FSIA, FAICDNon-executive DirectorMr Cormie, 67, has been a director since 1 December 1996. MrCormie is also a director of Bligh Oil and Minerals NL, BuderimGinger Limited, Magellan Petroleum Australia Limited andTechniche Limited.

Frank C B Haly AO FCA, AAUQNon-executive DirectorMr Haly, 67, has been a director since 1 July 1988. Mr Haly is aCompany Director and Chartered Accountant. He has practisedin Townsville and Brisbane and is now a consultant to theQueensland office of Deloitte Touche Tohmatsu. He is amember of council of the Queensland University of Technology.

James J Kennedy AO CBE FCA, D Univ (QUT)Non-executive DirectorMr Kennedy, 66, has been a director since 1 August 1997. MrKennedy is a Chartered Accountant and is Chairman ofQueensland Investment Corporation, Deputy Chairman of GWAInternational Limited and a director of Qantas Airways Limited,Australian Stock Exchange Ltd and Macquarie Industrial Trust.Mr Kennedy is also a member of the Prime Minister’s"Community Business Partnership", the Queensland Universityof Technology’s "Australian Centre for Strategic Management",Development Council of the University of Queensland and theBlake Dawson Waldron, National Advisory Board.

John D Story BA, LLBNon-executive DirectorMr Story, 54, has been a director since 24 January 1995. MrStory is the Queensland Chairman of Partners of the law firmCorrs Chambers Westgarth. He is a director of Grow ForceAustralia Limited, Jupiters Limited and Breakwater IslandLimited.

John Lamble Martin Kriewaldt Ian Blackburne Rod Cormie Frank Haly James Kennedy John Story

Executive Committee

1 5

W Steven Jones MBA (Hons), BEconManaging DirectorFor details refer to Board of Directors on previous page.

Mark Blucher AAIBFGroup General Manager Distribution and HRMr Blucher spent 19 years with the ANZ Bank’s operation inNew Zealand before joining the Group in September 1997 asGeneral Manager Human Resources. He was appointed to hispresent position in December 1998. During his time with ANZ,he held a number of senior positions in human resources, retailbanking, marketing and strategy. Mr Blucher was also involvedin the integration of New Zealand’s PostBank with ANZ.

Andy J Hogendijk AAUQ, FCPAChief Financial OfficerMr Hogendijk joined the Group in November 1997 as ChiefFinancial Officer. He had previously been with theCommonwealth Bank as CFO since 1991. He has experience insenior financial roles in other industries including media,mining and building materials.

Peter Johnstone LLBGroup General Manager Operations and ITMr Johnstone was Integration Project Manager for the Groupmerger in 1996 and was appointed to the role of GroupGeneral Manager Operations in March 1997. He added IT to hisportfolio in November 1998. Before joining the group, he waspreviously General Manager Operational Support and GeneralCounsel for the Bank of South Australia and headed thecorporatisation of the State Bank of South Australia. He has 28years’ experience in finance, business and law.

Greg Moynihan BCom, ASA, ASIAGroup General Manager Business LinesMr Moynihan was appointed to his current role following themerger in 1996. In 1998 he added general insurance and life,super and managed investments to his responsibilities. He hadpreviously been CEO of Metway Bank after having held the roleof General Manager Personal Banking as well as a number ofsenior positions in the bank.

Ray ReimerGroup General Manager Business BankingMr Reimer has been with the Group for over 20 years havingcommenced his banking career with the Agricultural Bank.After 14 years in a number of positions in Metway Bank’s retailbanking, he held the role of Queensland Manager and NationalManager in Commercial Banking, and General ManagerCommercial Banking.

Daniel Wilkie BA(Econ & Accounting), ACA, CPA, ACISGroup General Manager Corporate StrategyMr Wilkie joined the Group in May 1999. He previously heldthe position of Managing Director – Insurances, HIH InsuranceLtd where he was responsible for the combined IT functions ofHIH and FAI Insurance following their merger. Prior to that hewas Chief Operating Officer of FAI. Before 1995, he held anumber of senior management positions with NRMA includingChief Financial Officer & Chief Information Officer.

Steve Jones Mark Blucher Andy Hogendijk Peter Johnstone Greg Moynihan Ray Reimer Daniel Wilkie

Group Overview

Corporate Profile

Suncorp Metway is one of Australia’s 50 biggest

companies, and is the largest listed corporation in

Queensland, with a sharemarket value of close to $4

billion.

The company’s main businesses are banking,

investment and insurance services, focused on retail

consumers and small to medium sized businesses. It is

the sixth largest bank in Australia and the eighth

largest general insurer. The company also has

substantial life insurance, superannuation and managed

investments operations. Total funds under management

exceed $6.6 billion.

Suncorp Metway has 2.3 million customers and 4500

staff spread mainly through Queensland, NSW and

Victoria. It has 176 retail and business banking

branches and outlets, as well as 280 ATMs and almost

4000 EFTPOS terminals. It has also put in place full

interchange facilities with other banks, which enable

our cards to be accepted at all ATM machines across

Australia. Internet banking was introduced in

November 1999 at www.suncorpmetway.com.au, and

more than 50,000 customers have registered as users

of the site.

Corporate History

The current group was formed in December 1996 from

the merger of the publicly-listed Metway Bank, with

the government-owned Suncorp Ltd and the

Queensland Industry Development Corporation.

However, the group’s ancestry dates from 1902, when

the Queensland Government established the

Agricultural Bank. The Ag Bank ultimately became part

of the QIDC, which was created in 1986 primarily as a

rural financier. Suncorp started business in 1916 as the

State Accident Insurance Office, and grew into the

SGIO. And Metway Bank was first established in 1959

as the Metropolitan Permanent Building Society, before

converting to bank status in 1988.

Profitability

Profits have improved significantly since our merger,

rising to $335 million, after tax, for the year to June

2000, from $150 million for the 12 months to June 30,

1997, (which included seven months contribution from

Suncorp and QIDC). The group’s return on total equity,

including capital notes, now stands at 16.4 percent.

This profit improvement reflects significant progress in

restructuring the merged group to make it more

efficient and reduce costs. Group assets have grown

from $19.9 billion at the time of the merger, to $23.4

billion at June 30, 2000, (excluding assets we manage

for insurance and superannuation policyholders).

Growth Strategy

The company is focused on growth in each of its main

lines of business, with additional expansion driven

through the implementation of an Allfinanz strategy.

This involves selling a comprehensive range of financial

services, and increasing the number of products sold to

the company’s 2.3 million customers. We currently sell

2.59 products per household on average, and

1 6

25

20

15

10

5

0

Total Assets($b)

June 97

19.9 21.4 21.5

23.4*

June 98 June 99 June 00

*Adjusted for Life and Superannuation policyholders' interests

4.0

3.5

3.0

2.5

2.0

1.5

1.0 Ro

y M

org

an R

esea

rch

Products per main financialinstitution customer*

SGB

1.9

2.32.1

2.4 2.4

2.3

3.4

CBAWBC ANZ NAB CGH SME

Mar 99 Mar 00

* Australia

12 months to:

For all periods shown:

SGB includes Advance, Bank SA.

WBC includes Bank of Melb, Challenge, AGC.

ANZ includes Town & Country, Esanda.

CGH includes Colonial State Bank,First State Funds Management,

Prudential, Legal & General, Trust Bank.

CBA excludes CGH.

NAB excludes MLC.

1 7

Service, an understanding of their business and competitive pricing were the reasons Neal and Elizabeth Pfeffer were attracted to

Suncorp Metway. The Pfeffers operate an irrigated cotton and grain property on the Darling Downs. Suncorp Metway has been

able to assist the Pfeffers in providing finance for their rural operation, comprehensive insurance cover to protect their assets and

assistance with off-farm investment which has become an important part of their financial strategies. When Neal is not tending the

farm he enjoys a spin on his Harley Davidson.

Understanding the business

Banking

1 8

according to an independent survey, Suncorp Metway

has the highest cross sell rates in the financial services

sector.

Business alliances with other companies are also being

used to help us gain access to more customers in new

markets. A good example is our alliance with the Pivot

fertilizer company in Victoria. Suncorp Metway has

placed business managers in Pivot’s sales centres,

where we can use their relationships to help us identify

ways we can help their customers and sell products.

Acquisition opportunities are also constantly being

examined in the search for methods of building

shareholder value.

Ownership

Suncorp Metway has approximately 96,000

shareholders and there are also some 140,000 investors

who own Exchanging Instalment Notes, which convert

into Suncorp Metway shares.

The company’s ownership structure is a little

complicated, due to the way the group was created in

1996.

When the merger occurred, the State Government was

allocated shares and capital notes in return for the sale

of Suncorp and QIDC to Metway Bank. The

Government emerged with a 68 percent stake in the

merged group, but that holding has since been

reduced, effectively, to zero.

Nominally, the government still holds 18.5 million

shares and 124 million capital notes, (which are

convertible into shares), representing a 31.9 percent

stake in the company.

But the beneficial ownership of that stock has already

been passed to the public. The government has sold

notes to the public which will exchange for its Suncorp

Metway interest in October 2001.

A profile of our three product divisions, together with a

brief summary of the main events of the year, is

presented here.

BankingThe banking operation is the largest profit generator

within the group, earning $229 million before tax for

the year to June. It has total loans, advances and

receivables of $18 billion.

The banking operations are divided between retail

consumer banking and business banking, serving small

to medium sized businesses, to enable us to meet the

different needs of these customer segments.

Retail BankingRetail Banking offers a full range of financial services,

including home and personal loans and transaction and

savings accounts, credit cards and foreign currency

services, to nearly 900,000 customers.

Retail banking assets total some $10.7 billion, including

$10.2 billion in housing loans and $526 million in

consumer loans.

The principle distribution mechanisms are the retail

branch network of 140 branches, ATMs, two 24 hour

call centres, and the internet.

Operational Highlights

The major operational change during the year was the

completion of the One Brand project in September as

described in the Managing Director’s report. This

involved the creation of our new brand, Suncorp

Metway, and the associated restructuring of our branch

network and product range. The One Brand project

was completed without significant customer loss and

the new logo and brand name have rapidly been

accepted.

The company significantly increased its interstate

lending during the year, with 33 percent of new home

loan business now written outside Queensland. This

compares with 22 percent in the year to June 1999. A

major portion of this business was written through

Banking

1 9

intermediaries and external originators. Approximately

83 percent of retail banking assets are in Queensland,

however, this is changing as the group expands

interstate.

Major growth also was experienced through the sale of

home loans via the LJ Hooker real estate agency.

Suncorp Metway owns the LJ Hooker master franchise,

and has appointed mobile lenders to LJ Hooker’s 500

branch network across Australia. Further mobile lenders

are to be appointed in the current year to expand

business through this channel. Receivables associated

with the LJ Hooker chain and other alliances increased

from $491 million to $996 million during the year to

June 2000.

Suncorp Metway’s expansion into internet banking

since last October has been an outstanding success

with more than 50,000 customers using the internet

for their everyday banking needs. Currently customers

can pay bills, get account balances, transfer funds,

check recent transaction history and pay insurance

premiums from the comfort of their homes. Further

enhancements will be available in the coming months,

including additional facilities for our Business Banking

customers.

Business BankingThe Business Banking division is focused on the needs

of the business sector, particularly in the small to

medium sized segment, and has almost 50,000

customers.

The division has total assets of $7.1 billion, and has

four major areas of operation:

Commercial Banking This section provides working

capital and term finance for business clients with

borrowing requirements of more than $250,000. Total

assets in Commercial Banking are approximately $1.3

billion, all in Queensland. However, Commercial

banking has now expanded into NSW and Victoria with

the appointment of lending teams from1 July 2000.

Agribusiness is dedicated to providing financial

services for rural producers and associated businesses.

Suncorp Metway has been providing rural finance in

Queensland for more than 90 years and has a total

portfolio of more than $1.5 billion. The Agribusiness

section in the past has been included as part of the

Commercial banking operations. However, during the

year, Agribusiness was split from Commercial in order

to lift service levels and devote specific resources to

each discrete market segment. Agribusiness has been a

key expansion area during the past year, mainly

through the development of the Pivot alliance. During

the 12 months to June, the number of business

banking staff employed in the Pivot operations

doubled, and coverage was expanded to Gippsland and

the Riverina.

Property Finance includes development finance and

property investment. This section provides project

finance for real estate developments and term finance

for investment properties. Total assets in development

finance were $1.1 billion, with approximately

80 percent of business in residential housing

developments. Property Investment assets totalled

$1.7 billion at June 2000. Operations were expanded

into the Western Australian market during the year,

with the opening of an office in Perth.

Leasing This section provides leases to business

customers, mainly for vehicles and equipment. Total

lease assets were $1.5 billion.

2 0

Soheil Abedian, Managing Director of Sunland Group Limited, pictured here with Garry McLean, Suncorp Metway’s State Manager,

Development Finance, is very satisfied with the service he has received from Suncorp Metway’s Property Finance people. The

group’s association with Sunland, one of Australia’s most successful property development companies, began in1992 with a

residential subdivision at Gaven in south east Queensland. Eleven further residential construction projects have followed, including

some of the most striking buildings in Queensland.

“Although we are working with a number of different financial institutions, in Suncorp Metway we find an organisation that has

the vision to understand the partner they are dealing with. Throughout the eight years we have been working with them, they

have taken us from a very small company to now one of the largest publicly listed companies in Queensland – purely based on one

element that I can see – that’s the service.”

Service – a vision to understand the partner they are dealing with

The General Insurance division reported a 25 percent

increase in pre-tax profits to $211 million for the year

to June.

The division serves 1.7 million customers, and plays an

important role in providing insurance protection for its

policyholders throughout Australia, and particularly in

Queensland. In the year to June, Suncorp Metway paid

over 160,000 motor, home and commercial insurance

claims. The group also received approximately 8800

new personal injury claims and settled close to 10,000

CTP, public liability, disability, trauma and accidental

death claims. More than 5000 customers call each

week seeking insurance assistance.

Insurance premiums totalled $739 million during the

year to June, spread across the three main insurance

classes in which the company operates – personal lines,

commercial and CTP.

Compulsory Third Party insurance

Suncorp Metway is the largest CTP provider in

Queensland, insuring 1.3 million of the total 2.3 million

vehicles in the state. CTP is the General Insurance

division’s biggest single insurance class, with premium

revenue of $368 million in the year to June 2000. CTP

covers drivers and passengers of registered motor

vehicles involved in accidents, where the driver is not at

fault. Drivers pay their CTP insurance when they pay

their motor vehicle registration. This is a government

operated insurance scheme, and until the current year,

insurance prices had been set by a State Government

agency. This scheme is now in the process of being

partially deregulated from October 1. Suncorp Metway

has a 56 percent share of the Queensland CTP market,

and is therefore well placed to compete in a

deregulated environment. For more detail, see the

Managing Director’s report on page 11.

Personal Lines

This includes home and motor insurance, as well as

boat and personal effects insurance. Suncorp Metway

is the market leader in motor insurance in Queensland,

with more than 440,000 vehicles insured (28 percent

market share). It also is ranked number one in home

insurance in Queensland, with more than 360,000

homes insured (27 percent market share). Premium

income was $98 million during the year. The only major

insurance events of the year to June 2000 were

Cylones Steve and Tessi in North Queensland during

the summer, which gave rise to 3500 damage claims.

The total cost of these claims was around $10 million,

however Suncorp Metway’s exposure was capped at $5

million through reinsurance arrangements. When these

cyclones struck, 1070 on site damage assessments

were completed within three days by an ‘army’ of

Suncorp Metway assessors, and 99.9 percent of claims

were paid in full.

Commercial

This includes insurance cover for commercial motor and

property, engineering and construction, professional

indemnity and public liability. Premium income totalled

$113 million during the year. Approximately 37 percent

of commercial premium revenue is sourced from

interstate markets.

Suncorp Metway does not operate in reinsurance

markets, having closed its reinsurance book to new

business some years ago. The group has therefore been

immune to the shakeout in reinsurance which has

struck that industry in the past two years.

Distribution

Insurance distribution traditionally has been through a

network of insurance consultants as well as through

the branch network or call centre. This is more recently

being supplemented by the internet, where we now

provide insurance quote forms, and soon will be

providing on-line purchasing of cover.

Financial Strength

Suncorp Metway’s general insurance operations are

extremely strong financially, with approximately $1.7

billion held in provisions to meet future claims liabilities.

The general insurance company also has assets of $567

million available for solvency purposes, which is 2.3

times the minimum amount required by the Australian

Prudential Regulation Authority.

2 1

General Insurance

Life, Super and Managed Investments

Life, Super and Managed Investments reported a 20

percent increase in after tax earnings to $30 million for

the year to June.

This division provides wealth management products and

services for our individual and small business customers.

Products include superannuation, managed investments

(such as unit trusts), and life insurance products (such as

term life, trauma and disability insurance). Services range

from complex financial planning to more simple advice -

such as where to invest a small sum of money and save

tax. The division sells Suncorp Metway products as well

as investment products from other investment services

companies.

The division has some 140,000 customers, and total

funds under management exceed $2.6 billion. It is

currently the smallest contributor to group profit, but has

the biggest potential to grow. Wealth management is

one of the most rapidly expanding sectors in financial

services, and only nine percent of group customers

currently hold a product from this range.

The division has undergone significant restructuring in

the past two years to make it more competitive and

attractive to investors. New products have been

introduced, such as nil-entry fee unit trusts, and a master

trust which provides much more flexibility for investors,

offering 30 different investment options. The product

range also has been streamlined, with old-fashioned,

out-dated products withdrawn. Investment mandates

also have been changed to increase equity exposure and

lift investment performance, and back office processes

have been reorganised to improve efficiency.

The distribution network also has been restructured with

the expansion of the financial adviser channel from 40

advisers in 1997 to 102 advisers currently. Advisers are

highly trained salaried employees who are attached to

retail branches and can take advantage of opportunities

which arise when customers come into the branches

with funds to invest or insurance needs to be met.

Supplementing these financial advisers are 110

commission based agents. This year, the division also

began to offer products through independent advisers

and agents.

The division’s performance has been underpinned in the

past two years by strong investment returns due to

excellent investment management. Almost all products

ranked in the first or second quartile for investment

performance, and the capital guaranteed superannuation

fund has topped the Australian market for 5 years.

Other Group Companies

As discussed earlier, Suncorp Metway owns the

LJ Hooker real estate franchisor. LJ Hooker is Australia’s

largest real estate chain, with more than 600 franchises

through Australia and New Zealand. The company’s

profitability improved significantly in the year to June,

due to buoyant conditions in real estate markets.

Suncorp Metway had also previously held a 43 percent

stake in the Knight Frank commercial real estate arm,

however, this was sold to Knight Frank UK in June.

2 2

Asset Class Market Returns SMIML Performance

Cash 5.58% 5.75%

Australian Fixed Interest 6.17% 6.61%

World Fixed Interest 5.09% 5.49%

Australian Equities 15.42% 20.71%

World Equities 23.68% 27.74%

Listed Property Trusts 9.10% 7.37%

Direct Property 12.15% 10.01%

Table represents the performance of all funds under SMIML management.

2 3

Retirees Barry and Gretel Campbell are more than satisfied with the advice and support they get from Suncorp Metway through

their financial adviser James Cheshire. Having sold their manufacturing business in New Zealand and moved to acreage on the

Gold Coast, Barry and Gretel soon realised that while they had funds to last them into retirement, the effects of tax and inflation

were eating into their nest egg. Barry invested their funds into a more effective range of investment funds and reduced their

taxation through using an allocated pension.

With the financial concerns out of the way, and knowing they can look forward to a comfortable retirement, Barry and Gretel can

indulge in their hobby of making and flying model aircraft.

Creating wealth

Corporate Governance

The Board of Directors is responsible for the Corporate

Governance of Suncorp-Metway Ltd and its controlled

entities. Summarised in this statement are the main

Corporate Governance practices that have been

established by the Board and were in place throughout

the financial year, unless otherwise stated, to ensure

the interests of shareholders, customers and staff are

protected.

Board Responsibilities

The Board of Directors is accountable to shareholders

for the performance of the Suncorp Metway Group

and has overall responsibility for its operations. The

Group conducts a diverse and complex range of

business including banking, general insurance, life

insurance and funds management, which means an

important feature of the work of the Board is to ensure

compliance with the prudential and solvency

requirements of the Australian Prudential Regulation

Authority. Board members of Suncorp-Metway Ltd also

undertake roles as directors of Suncorp Metway

Insurance Ltd and Suncorp Life & Superannuation

Limited.

The key responsibilities of the Board include:

• Approving the strategic direction and related

objectives for the Group and monitoring

management performance in the achievement of

these objectives.

• Adopting an annual budget and monitoring the

financial performance of the Group.

• Selecting, appointing, setting targets for and

reviewing the performance of the Managing Director.

• Overseeing the establishment of adequate internal

controls and effective monitoring systems.

• Ensuring all major business risks are identified and

effectively managed.

• Ensuring that the Group meets its legal and statutory

obligations.

Board Composition

At the date of this statement, the Board comprises

seven non-executive directors and the Managing

Director. Whilst the non-executive directors of the

Board have no other material relationship or association

with the company or its subsidiaries (other than their

directorships) and therefore are regarded as

independent of the company and management, Mr

Story is a member of a legal firm which may provide

services to the Group from time to time. The names of

directors of the company in office at the date of this

statement including details of director’s qualifications

and experience are set out under Board of Directors on

page 14.

The composition/membership of the Board is subject to

review in a number of ways, as outlined below.

The Company’s Constitution provides that at every

Annual General Meeting, one third of the directors,

excluding the Managing Director, shall retire from office

but may stand for re-election. The Constitution also

states that once a director reaches 72 years of age, that

director must stand for re-appointment at each

subsequent Annual General Meeting.

Board composition is also reviewed periodically by the

Chairman’s Committee either when a vacancy arises or

if it is considered that the Board would benefit from

the services of a new director, given the existing mix of

skills and experience of the Board which should match

the strategic demands of the Group. Once it has been

agreed that a new director is to be appointed, a search

is undertaken, sometimes using the services of external

consultants. Nominations are subsequently received

and reviewed by the Chairman’s Committee before the

details of final candidates are submitted to the Board

for consideration.

The Queensland Government is currently a substantial

shareholder of the Company and has the right to

appoint a maximum of three directors out of a nine

director Board. Pursuant to a Deed of Covenant

between the Company, the State of Queensland and

2 4


the Commonwealth, the State has agreed that it will

not, whether through its appointees to the Board or in

any other way, conduct or attempt to conduct the

operations of the Suncorp Metway Group.

Board Appraisal

A structured process has been established to review

and evaluate the performance of the Board. Each year,

a survey of directors is coordinated by the Chairman to

review the role of the Board, to assess the performance

of the Board over the previous 12 months and to

examine ways of assisting the Board collectively and

directors individually in performing their duties more

effectively. The issues examined include Board

interaction with management, the type of information

provided to the Board by management and overall

management performance in helping the Board meet

its objectives.

Compensation Arrangements

As indicated elsewhere in this statement, the

Chairman’s Committee has responsibility for

recommending appropriate remuneration arrangements

for directors. Recommendations are based on a number

of factors, including the overall performance of the

company, comparisons with the remuneration levels of

other companies of similar size in the financial services

industry and the demands placed on directors in

performing their role.

The total remuneration available for distribution to

directors is determined by shareholders at the Annual

General Meeting. Also, in accordance with approvals

granted by shareholders, retirement benefits are paid to

non-executive directors. Details of directors’ benefits

and interests are set out in the Directors’ Report and

the Related Party section of the notes to the 2000

Consolidated Financial Report.

Independent Professional Advice

The board collectively and each director individually has

the right to seek independent professional advice at the

expense of the company.

A director seeking such advice must obtain the

approval of the Chairman or in his absence the Board

and such approval may not be unreasonably withheld.

A copy of advice received by a director is made

available to all other members of the Board.

Board Committees

So as to provide adequate time for the whole Board to

concentrate on strategy, planning and performance

enhancement, the Board has delegated certain specific

duties to Board committees. To this end the Board has

established four committees each with a defined

charter, to assist and support the Board in the conduct

of its duties and obligations. The structure and

membership of the Committees is reviewed annually.

Audit, Business Risk and Compliance Committee

The primary role of this Committee is to monitor and

review the effectiveness of the Group’s control

environment in the areas of operational risk,

legal/regulatory compliance and financial reporting.

Specific issues addressed throughout the year included;

• Year 2000 progress reports

• Evaluation of the group’s reinsurance program

• Evaluation of the group’s compliance and risk

management structure and procedures

• Business continuity planning

• Management delegations

• Audit planning

• Half-year and annual financial statements and reports

2 5


The Committee is also responsible for recommending

to the Board the appointment and removal of the

external auditors and for determining the terms of

engagement.

To enhance the independence of the audit functions

(both internal and external) there are no management

representatives on the committee however the

Managing Director, Chief Financial Officer, and the

internal and external auditor are invited to committee

meetings at the discretion of the committee. The

committee also holds discussions with the auditors in

the absence of management on a regular basis.

Membership

F C B Haly (Chairman), M D E Kriewaldt, J D Story.

Board Credit Committee

The primary role of this committee is to monitor the

effectiveness of the credit function of the Group to

control and manage the credit risks within the Group,

including the loan, investments and insurance

portfolios.

Membership

R F Cormie (Chairman), P A Cross (resigned 15 May

2000), J J Kennedy, J D Story, W S Jones (Managing

Director)

Investment Committee

The primary role of this committee is to monitor the

effectiveness of the investment processes of the Group

in achieving optimum return relative to risk and to

identify and monitor the Group balance sheet risk

(interest rate risk and liquidity risk) within limits set by

the Board.

Membership

M D E Kriewaldt (Chairman), P A Cross (resigned 15

May 2000), R J Lamble, R F Cormie, W S Jones

(Managing Director), G A Tomlinson (resigned 2 March

2000)

Chairman’s Committee

The Chairman’s Committee is responsible for making

recommendations to the Board on:

• The remuneration of directors and the remuneration

and performance targets of the Managing Director.

(The Committee also reviews the remuneration and

performance targets of direct reports to the

Managing Director.)

• Composition of Board Committees

• Composition of the Board

• Operation and performance of the Board

• Remuneration and human resource policy matters.

Membership

R J Lamble (Chairman), J D Story, J J Kennedy

Risk Management

The Company is required to manage a diverse and

complex range of significant risks. Details of those risks

and the type of controls and structures that are in place

to ensure they are effectively managed, are set out in

the "Risk Management" section of the notes to the

2000 Consolidated Financial Report.

Code of Ethics

Directors, management and staff are expected to

perform their duties for the Group in a professional

manner and act with the utmost integrity and

objectivity, striving at all times to enhance the

reputation and performance of the Group.

The standards adopted by the Group include a policy

regarding directors and senior officers buying and

selling Suncorp-Metway Ltd shares, which takes into

account the responsibility not to trade when in

possession of information which, if disclosed publicly,

would be likely to materially affect the market price of

Suncorp-Metway Ltd shares.

2 6

CONCISE FINANCIAL RE PORT

2 0 0 0

Directors’ Report

The directors present their report together with the

Concise Financial Report of the consolidated entity,

being Suncorp-Metway Ltd (the Company) and its

controlled entities, for the year ended 30 June 2000

and the auditors' report thereon.

Directors

The directors of the Company at any time during or

since the end of the financial year are:

R John Lamble AO (Chairman) director since 1996

Martin D E Kriewaldt (Deputy Chairman) director since 1996

W Steven Jones (Managing Director) director since 1997

Rodney F Cormie director since 1996

Patricia A Cross (resigned 15 May 2000) director since 1996

Frank C B Haly AO director since 1988

James J Kennedy AO CBE director since 1997

John D Story director since 1995

Geoffrey A Tomlinson (resigned 2 March 2000) director since 1999

Dr Ian D Blackburne director appointed 3 August 2000

Particulars of the directors' qualifications and

experience are set out under Board of Directors on

page 14.

Principal activities

The principal activities of the consolidated entity during

the course of the year were the provision of banking,

insurance, superannuation and funds management

products and services to the retail, corporate and

commercial sectors. There were no significant changes

in the nature of the activities carried out by the

consolidated entity during the year.

Review of operations and results

Consolidated operating profit before abnormal items

and goodwill amortisation and after income tax for the

year ended 30 June 2000 was $345 million (1999:

$269 million). Consolidated operating profit after

abnormal items, goodwill amortisation and income tax

was $335 million (1999: $247 million).

Further information on the operations of the Company,

and the results of those operations, can be found in

the Chairman's Letter on pages 2 to 4 and the

Managing Director's Report on pages 6 to 13.

Except where otherwise stated, all amounts relate to

the year ended 30 June 2000 and comparatives are for

the year ended 30 June 1999.

Dividends

Dividends paid or declared by the Company since the

end of the previous financial year were:

Ordinary shares

As noted in last year's report, a fully franked 1999 final

dividend of 22 cents per share, amounting to $45

million, was paid on 15 October 1999.

As noted in last year's report, a 1999 final dividend of

19.8 cents per subordinated dividend ordinary share,

amounting to $19.8 million was paid on 15 October

1999. The dividend was paid unfranked.

A fully franked 1999 interim dividend of 22 cents per

share, amounting to $67 million, was paid on 20

March 2000.

Directors have declared a fully franked 2000 final

dividend of 24 cents per share on ordinary shares,

amounting to $77 million to be paid on 13 October

2000.

Converting preference shares Series 2

The 5,455,140 remaining Suncorp Metway Converting

Preference Shares (Series 2) were converted into

10,123,975 Suncorp Metway ordinary shares on 3

November 1999. A fully franked dividend equivalent to

8.5 percent per annum was paid for the period 15

September 1999 to 2 November 1999 at the rate of

14.83 cents per share, amounting to $2 million.

2 8

Directors’ Report

Converting capital notes

As noted in last year's report, a distribution of 39.15

cents per note, amounting to $58 million, was paid on

30 September 1999 for the period 1 July 1998 to 30

June 1999. During the year, 18.5 million converting

capital notes were converted to ordinary shares.

A distribution of 39.15 cents per note, amounting to

$53 million, for the period 1 July 1999 to 30 June 2000

is payable on 30 September 2000.

State of affairs

Significant changes in the state of affairs of the

consolidated entity during the financial year were as

follows:

During the year under review, the Company completed

a share buy-back totalling $100 million. In all 12.3

million shares were purchased at an average price of

$8.135 per share. The share buy-back was undertaken

as part of an on-going capital management program to

maintain earnings per share and returns to

shareholders as the capital notes issued to the

Queensland Government are converted to ordinary

shares.

In February 2000, the Company issued a US$300

million floating rate note under its US$2,000 million

Euro Medium Term Note Program. The note has a three

year maturity and was issued at a yield of LIBOR plus

28 basis points.

In July 2000, Moody's upgraded its long-term debt

credit ratings for the Company. The rating for deposits

was upgraded from Baa1 to A3, senior debt from Baa2

to A3, subordinated debt from Baa3 to Baa1, and

junior subordinated debt from Ba1 to Baa1.

Events subsequent to balance date

No matters or circumstances have arisen since the end

of the financial year which have significantly affected or

may significantly affect the operations of the

consolidated entity, the results of those operations, or

the state of affairs of the consolidated entity in

subsequent financial years.

Environmental regulation

The operations of the consolidated entity are not

subject to any particular and significant environmental

regulation under any law of the Commonwealth of

Australia or any of its states or territories. The

consolidated entity may however become subject to

environmental regulation when enforcing securities

over land for the recovery of loans.

The consolidated entity has not incurred any liability

(including for rectification costs) under any

environmental legislation.

Likely developments

Information as to the likely developments in the

operations of the consolidated entity is set out in the

Chairman's Letter on pages 2 to 4 and the Managing

Director's Report on pages 6 to 13. Further information

as to the likely developments in the operations of the

consolidated entity and the expected results of those

operations in subsequent financial years could, in the

opinion of the directors, unreasonably prejudice the

interests of the consolidated entity and therefore has

not been included in this report.

Indemnification

Under the Company's Constitution, the Company

indemnifies each person who is or has been a director

or officer of the Company. The indemnity relates to all

liabilities to another party (other than the Company or

a related body corporate) that may arise in connection

with the performance of their duties to the Company

and its controlled entities, except where the liability

arises out of conduct involving a lack of good faith.

The Constitution stipulates that the Company will meet

the full amount of such liabilities, including costs and

expenses incurred in successfully defending civil or

criminal proceedings or in connection with an

application, in relation to such proceedings, in which

relief is granted under the Corporations Law.

2 9

Directors’ Report

Insurance of directors and officers

During the financial year ended 30 June 2000 the

Company paid insurance premiums in respect of a

Directors' and Officers' Liability insurance contract. The

contract insures each person who is or has been a

director or executive officer (as defined in the

Corporations Law) of the Company against certain

liabilities arising in the course of their duties to the

Company and its controlled entities. The directors have

not included details of the nature of the liabilities

covered or the amount of the premium paid in respect

of the insurance contract as such disclosure is

prohibited under the terms of the contract.

Directors' and senior executives' emoluments

The Chairman's Committee is responsible for making

recommendations to the Board on remuneration

policies and packages applicable to the Board members

and senior executives of the Company. The broad

remuneration policy is to ensure the remuneration

package properly reflects the person's duties and

responsibilities, and that remuneration is competitive in

attracting, retaining and motivating people of the

highest quality.

Employees including executive directors and senior

executives may receive annual bonuses based on the

achievement of specific goals related to the

performance of the consolidated entity (including

operational results and cash flow). Such bonuses may

include options over ordinary shares. The ability to

exercise the options is conditional on the Company

achieving certain share price levels. Non-executive

directors do not receive any performance related

remuneration.

Note 9 sets out the details of the nature and amount

of each major element of their respective emolument

for each director and for each of the five most highly

remunerated officers of the Company and the

consolidated entity.

Options

During the financial year, the Company granted options

over unissued ordinary shares to a number of

employees as part of their remuneration and details of

these are set out in note 10.

Directors' interests

The relevant interest of each director in the share

capital of the Company at the date of this report,

including interests in Exchanging Instalment Notes, as

notified by the directors to the Australian Stock

Exchange in accordance with Section 205G(1) of the

Corporations Law, is as follows:

3 0

Fully Paid Exchanging Exchanging Options over Ordinary Instalment Instalment Ordinary

Shares Note Series 1 Note Series 2 Shares

R J Lamble 30,000 - 6,000 -

M D E Kriewaldt 17,850 - 30,000 -

W S Jones 25,393 - 25,000 2,000,000

I D Blackburne - - - -

R F Cormie 7,500 - - -

F C B Haly 141,673 - 33,000 -

J J Kennedy 1,500 - - -

J D Story 46,832 - 20,000 -

Exchanging Instalment Notes are securities issued by the State of Queensland which when converted entitle the

holder of the notes to an equivalent number of ordinary shares in the Company.

Directors’ Report

Column A indicates the number of meetings held

during the year while the director was a member of the

Board or Committee.

Column B indicates the number of meetings attended

by the director during the year while the director was a

member of the Board or Committee.

1 In addition to the standing committees of directors,

there are director committees established for special

purposes. Due to their nature, attendance details of

such committees have been combined.

3 1

Directors’ meetings

The number of directors’ meetings (including meetings of committees of directors) and number of meetings

attended by each of the directors of the Company during the financial year were:

Board of Audit, Business Investment Credit Chairman’s Other1

Directors Risk & Compliance Committee Committee CommitteeCommittee

A B A B A B A B A B A B

R J Lamble 12 12 - - 10 9 - - 8 8 1 1

M D E Kriewaldt 12 12 12 12 10 10 - - 5 5 14 14

W S Jones 12 11 - - 10 7 9 5 - - - -

R F Cormie 12 12 - - 10 9 9 8 - - 4 4

P A Cross 10 9 - - 9 7 8 6 - - - -

F C B Haly 12 12 12 12 - - - - 5 5 1 1

J J Kennedy 12 10 - - - - 9 9 3 3 - -

J D Story 12 12 12 12 - - 9 9 3 3 6 6

G A Tomlinson 7 7 - - 7 6 - - - - 10 10

Rounding off

The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998. Consequently, amounts in this

report and the accompanying Concise Financial Report have been rounded off to the nearest one million dollars

unless otherwise indicated.

Signed on 31 August 2000 in accordance with a resolution of the directors.

R John Lamble AO W Steven Jones

Chairman Managing Director

Suncorp-Metway Ltd and controlled entities

3 2

Profit & Loss Statement for the year ended 30 June 2000

Discussion and analysis of the profit and loss statement

Suncorp-Metway Ltd achieved an operating profit

before income tax, amortisation of goodwill and

abnormal items of $520 million (1999: $356 million)

and after tax and abnormal items of $335 million

(1999: $247 million).

To understand the current year's performance against

the previous year shown in the consolidated profit and

loss statement, it is important to note the impact of

adopting the new Accounting Standard AASB1038

'Life Insurance Business', effective from 1 July 1999.

The impact for the year ended 30 June 2000 is to

increase operating revenue and expenses as set out in

note 2(b), although there is no impact on operating

profit after tax.

All business segments increased their contribuion to the

Group's result compared with the previous year. The

business segment operating profit before income tax,

amortisation of goodwill and abnormal items is as

follows:

2000 1999

$m $m

Banking 229 157

General insurance 211 169

Life insurance and superannuation 75 251

Other 5 5

Total 520 356

1 1999 result of $25 million after charging income tax

expense of $34 million.

BankingBanking operating profit before income tax,amortisation of goodwill and abnormal items increased46 percent to $229 million. This result was achievedmostly through the reduction of costs. The prior year'sresult included $57 million in costs associated with Year2000 remediation, the Transformation restructuringprogram and the One Brand amalgamation program.$19 million was incurred in the current year completingthese projects. Further cost reductions were achieved toreduce operating expenses to $338 million from $413million in the previous year.

Net interest income increased to $475 million from$470 million in 1999. A higher loans base was mostlyoffset by competition in the banking sector which saw

margins slip from 2.56 percent in 1999 to 2.48 percentin 2000. The bad debts rose from $20 million in 1999to $26 million in 2000, largely as a result of increasingthe general provisioning for bad debts consistent withthe increase in risk weighted loan balances.

General insuranceGeneral insurance increased its contribution tooperating profit before income tax, amortisation ofgoodwill and abnormal items 25 percent to $211million. This result was achieved from an “InsuranceTrading Result” that increased $36 million on last yearand returns on shareholder’s funds ($98 million)matching last year ($96 million).

Net premium income increased $54 million (7.9percent) to $739 million. Premium income is net of theGST collected on premiums that will be earned nextfinancial year. Premiums were increased by less thanthe 10 percent rate of GST, acknowledging reducedcosts of claims and administration expenses that areexpected as a result of the CommonwealthGovernment's tax reforms. Pricing could not beadjusted for Queensland CTP reducing the profitabilityof this product. While profitability is maintained forproducts other than CTP, there is a reduction ofapproximately $8 million in the reported income thatwould have otherwise been earned.

Claims experience improved on last year, with fewercatastrophes experienced in the current year.Reinsurance recoveries, have reduced as a result. Claimsexpense has however increased by $29 million, due tothe impact of changes in interest rates and othervaluation variables applied in the valuation of theprovisions for outstanding claims. There was anoffsetting increase ($45 million) in investment returnson securities which underpin the claims liabilities andprovide protection against the impact of interest rateson claims liabilities.

Life insurance and superannuationLife insurance and superannuation increased operatingprofit before income tax by 25 percent, largely due toincreased investment returns.

Return on equityThe improved operating profit, combined with theshare buy-back, resulted in a 41 percent increase indiluted earnings per share, from 49.1 cents last year to69.5 cents per share this year. The return on averageshareholders' equity (diluted) increased to 16.4 percentfrom 12.1 percent.


3 3

Profit & Loss Statement for the year ended 30 June 2000

Note Consolidated2000 1999

$m $m

Banking interest income 3 1,359 1,305Banking interest expense 4 (884) (835)

475 470General insurance premium revenue 3 788 725Life insurance premium revenue 3 543 -Reinsurance and other recoveries revenue 3 94 115General insurance investment income 3 252 200Life insurance investment income 3 307 -Other operating income 3 157 163

Total operating income 2,616 1,673

General insurance claims expense (684) (655)Life insurance claims expense (486) -Outwards reinsurance expense (63) (40)Increase in policy liabilities (228) -Increase in policyholder retained benefits (3) -Other operating expenses 4 (604) (602)

Total operating expenses (2,068) (1,297)

Operating profit before bad and doubtful debts expense, amortisation of goodwill, abnormal items and income tax 548 376Bad and doubtful debts expense (28) (20)

Operating profit before amortisation of goodwill, abnormal items and income tax 520 356Amortisation of goodwill (10) (10)

Operating profit before abnormal items and income tax 510 346Abnormal items 6 - (26)

Operating profit before income tax 510 320

Income tax (expense) benefit associated with:Operating profit before abnormal items (175) (87)Abnormal items 6 - 14

Income tax attributable to operating profit (175) (73)

Operating profit after income tax attributable to the members of the company 335 247Retained profits at the beginning of the financial year 244 171

Total available for appropriation 579 418Dividends paid or provided 7 (199) (174)

Retained profits at the end of the financial year 380 244

Cents CentsBasic earnings per share after abnormal items 88.58 60.92Diluted earnings per share after abnormal items 69.50 49.16

Percent PercentPayout ratio after abnormal items 59.40 70.45The profit and loss statement should be read in conjunction with the discussion and analysis on page 32 and the notes to the concise financial report set out on pages 38 to 49.

3 4

Balance Sheet as at 30 June 2000

Discussion and analysis of the balance sheet

The assets of the consolidated entity show an increase

of 22 percent to $26,219 million. The major reason for

this increase is the addition of the assets (and liabilities

and equity) of the life insurance statutory funds as a

result of adopting the new Accounting Standard

AASB1038 'Life Insurance Business'. In the prior year,

these assets are not included in the consolidated entity's

balance sheet. The impact of AASB1038 is set out in

note 2(b). The growth in assets without the life

insurance statutory funds was 8.9 percent.

Investment securities grew $3,175 million to $5,565

million. $2,722 million was added to the balance sheet

this year from the first time inclusion of the life

insurance statutory funds.

Indicative of the growth in the banking business, loans,

advances and other receivables have increased 7.7

percent to $18,067 million (7.4 percent to $18,014

million excluding the inclusion of life insurance statutory

fund receivables and 7.4 percent to $17,842 million for

banking only). Loans, advances and other receivables

comprise the following major items:

2000 1999$m $m

Banking

Housing loans 10,229 9,497

Commercial loans 5,588 5,079

Lease finance 1,504 1,652

Consumer receivables 526 415

Structured finance 85 84

Other 20 -

17,952 16,727

Less provision for impairment (110) (120)

Total banking 17,842 16,607

General and life insurance 225 162

Total 18,067 16,769

The increase in loans, advances and other receivables

was largely funded by wholesale borrowings,

comprising securities issued and offshore borrowings,

which account for most of the increase in deposits and

short term borrowings in the balance sheet.

Life insurance policy liabilities and unvested policyholder

benefits have been added to the Group balance sheet

this year in accordance with AASB1038, as detailed in

note 2(b).

Share capital reduced as a result of the $100 million

buy-back during the year, offset by the conversion of

18.5 million convertible capital notes to ordinary share

capital ($83 million).

Banking capital adequacy is held at our target of 10.5

percent (1999: 11.7 percent). The share buy-back and

dividends paid from the profits of the Group are initially

funded by the Company, which also holds the capital

for banking capital adequacy. Profits from the insurance

subsidiaries are passed up to the Company as required

to ensure the banking capital adequacy targets are

maintained and to pay dividends to shareholders of the

Company. General insurance solvency levels have

strengthened to 2.32 times the minimum statutory

requirements, from 2.30 in 1999, as a result of the

general insurance profits being retained in that business.

This capital is available to the Company if required.

Net tangible assets per share increased from $3.27 at

30 June 1999 to $3.72 at 30 June 2000. Net tangible

assets for purposes of this calulation is made up of

shareholders' equity of $1,918 million less converting

capital notes of $558 million and intangibles of $164

million.


3 5

Balance Sheet as at 30 June 2000

Note Consolidated2000 1999

$m $m

Assets

Cash and short term liquid assets 498 186

Receivables due from other financial institutions 189 2

Trading securities 963 1,149

Investment securities 5,565 2,390

Loans, advances and other receivables 18,067 16,769

Statutory deposit with Reserve Bank of Australia - 170

Property, plant and equipment 150 148

Unlisted investment in life insurance statutory funds - 97

Intangible assets 164 174

Other assets 623 399

Total assets 26,219 21,484

Liabilities

Deposits and short term borrowings 14,509 11,671

Payables due to other financial institutions 57 21

Accounts payable and other liabilities 847 370

Provisions 524 326

Outstanding claims and unearned premiums provisions 2,128 2,097

Life insurance policy liabilities 2,363 -

Policyholder retained benefits 233 -

Bonds, notes and long term borrowings 3,092 4,553

Subordinated notes 542 558

Total liabilities 24,295 19,596

Net assets 1,924 1,888

Shareholders' equity

Share capital 958 975

Converting capital notes 8 558 641

Reserves 22 22

Retained profits 380 244

Shareholders' equity attributable to members of the Company 1,918 1,882

Outside equity interests in controlled entities 6 6

Total shareholders' equity 1,924 1,888

$ $

Net tangible asset backing per share 3.72 3.27

The balance sheet should be read in conjunction with the discussion and analysis on page 34 and the notes to the concise financial report set out on pages 38 to 49.


3 6

Statement of Cash Flows for the year ended 30 June 2000

Discussion and analysis of the statement of cash flows

Life insurance and superannuation

The statement of cash flows is also affected by the recognition of the life insurance cash flows in the current year.

The impact of consolidating the life insurance cash flows is set out below:Consolidated

2000$m

Cash flows from operating activities

Interest received 75

Dividends received 55

Premiums received 499

Reinsurance and other recoveries received 10

Other operating income received 42

Outwards reinsurance premiums paid (14)

Claims paid (442)

Operating expenses paid (61)

Income taxes paid - operating activities (5)

Net cash inflow from operating activities 159

Cash flows from investing activities

Net increase in loans, advances and other receivables (1)

Purchase of investments integral to insurance activities (7,046)

Proceeds from disposal of insurance investments 6,713

Income taxes paid - investing activities (19)

Net cash outflow from investing activities (353)

Cash flows from financing activities

Net increase in deposits and other borrowings (2)

Dividends paid (16)

Net cash outflow from financing activities (18)

Net decrease in cash and cash equivalents (212)

Cash at the beginning of the financial year 337

Cash at the end of the financial year 125


Whilst GST collected on general insurance premiums is

not included in premium revenue, $40 million has been

added back to the amount shown as premiums received

in the statement of cash flows. As the GST collected

was not paid to the Government until 21 August 2000,

it has increased the cash flow from operations in the

current year.

Adjusting for the effect of the life insurance cash flows,

the cash flows for investing activities reflect reduced

purchase and sale activity in general insurance

investments. At 30 June 2000, investment income from

general insurance activities included $122 million (1999:

$56 million) unrealised gains in the market value of

investments.

Cash flows from financing activities reflect the share

buy-back and the raising of wholesale funds to support

banking operations.

3 7

Statement of Cash Flows for the year ended 30 June 2000

Consolidated2000 1999

$m $m

Cash flows from operating activities

Banking interest received 1,531 1,395

Dividends received 57 24

Premiums received 1,370 743

Reinsurance and other recoveries received 93 82

Other operating income received 252 261

Interest paid (855) (826)

Outwards reinsurance premiums paid (63) (40)

Claims paid (1,105) (635)

Operating expenses paid (518) (655)

Income taxes paid - operating activities (30) (3)

Net cash inflow from operating activities 732 346

Cash flows from investing activities

Payments for plant and equipment (46) (67)

Net proceeds from disposal of banking securities 190 670

Net increase in loans, advances and other receivables (1,261) (1,169)

Proceeds from securitisation of loans - 220

Return of deposits from (lodgement with) Reserve Bank of Australia 170 (7)

Purchase of investments integral to insurance activities (14,567) (11,980)

Proceeds from disposal of investments integral to insurance activities 14,342 11,676

Income taxes paid - investing activities (34) (31)

Net cash outflow from investing activities (1,206) (688)

Cash flows from financing activities

Proceeds from subordinated notes - 170

Buy-back of shares (100) -

Repayment of subordinated notes (16) (60)

Net increase in deposits and other borrowings 1,241 133

Dividends paid (193) (155)

Net cash inflow from financing activities 932 88

Net increase (decrease) in cash and cash equivalents 458 (254)

Cash at the beginning of the financial year 167 421

Adjustment resulting from adoption of Accounting Standard AASB 1038 'Life Insurance Business' 5 -

Cash at the end of the financial year 630 167

The statement of cash flows should be read in conjunction with the discussion and analysis on page 36 and the notes to the concise financial report set out on pages 38 to 49.


3 8

Notes to the Concise Financial Report for the year ended 30 June 2000

1 BASIS OF PREPARATION

The Concise Financial Report has been prepared in

accordance with the Corporations Law, Accounting

Standard AASB 1039 "Concise Financial Reports" and

applicable Urgent Issues Group Consensus Views. The

Concise Financial Report incorporating the financial

statements and specific disclosures required by AASB

1039 has been derived from the consolidated entity's

consolidated financial report for the financial year. Other

information included in the Concise Financial Report is

consistent with the consolidated entity's consolidated

financial report. The Concise Financial Report does not,

and cannot be expected to, provide as full an

understanding of the financial performance, financial

position and financing and investing activities of the

consolidated entity as does the full financial report.

Except where otherwise stated, the Concise Financial

Report has been prepared on the basis of historical costs

and does not take into account changing money values.

The accounting policies adopted have been consistently

applied by each entity in the consolidated entity and,

except where there is a change in accounting policy

(note 2), are consistent with those of the previous year.

A full description of the accounting policies adopted by

the consolidated entity may be found in the

consolidated entity's full financial report.

2 CHANGES IN ACCOUNTING POLICY

2(a) Capitalisation of computer software costs

The group has changed its policy in relation to costs of

computer software. Effective from 1 July 1999 costs

incurred in acquiring, installing, enhancing and

developing application software for internal use are

being capitalised and amortised over the estimated

useful life, up to a maximum of three years.

As a result of the change in this accounting policy:

• Operating profit after tax for the year ended 30 June

2000 increased by $6.1 million and assets as at that

date increased by $9.5 million; and

• Basic earnings per share increased by 1.92 cents and

diluted earnings by 1.34 cents.

2(b) Life insurance business

The consolidated entity has adopted Accounting

Standard AASB 1038 'Life Insurance Business' effective

from 1 July 1999. AASB1038 requires the parent entity

of a life insurer to include in its financial report all its

assets, liabilities, revenues, expenses and equity

irrespective of whether they are designated as relating

to policyholders or to shareholders.

Prior to adopting AASB 1038 the value of the

consolidated entity's shareholder interest in life

insurance statutory funds was consolidated, however

the policyholders' interests in the assets of these funds

were not consolidated. This treatment is reflected in the

comparative figures.

In accordance with the Corporations Law comparative

figures could not be adjusted to recognise the assets,

liabilities, revenues, expenses and equity of the life

business as now required by AASB 1038, and therefore

are inconsistent with current year disclosures.


3 9


2 CHANGES IN ACCOUNTING POLICY (continued)

2(b) Life insurance business (continued)

The impact on the financial statements of adopting AASB 1038 is set out below.

Profit and loss statement

The operating revenue and operating expenses for the year ended 30 June 2000 have increased as set out in the

following table.2000

$m

Investment income 307

Insurance premium revenue 543

Reinsurance and other recoveries revenue 11

Investment and other operating revenue (26)

Total operating income 835

Claims expense (486)

Reinsurance expense (14)

Increase in policy liabilities (228)

Increase in policyholder retained benefits (3)

Other operating expenses (59)

Total operating expenses (790)

Operating profit before income tax 45

Income tax expense (45)

Operating profit after income tax -

The operating profit after income tax attributable to shareholders has been recognised as profit attributable to thegroup in prior years. The profits allocated to policyholders are not included as part of the group profit and aretransferred directly to 'Policyholders retained benefits' on the balance sheet.

Balance sheet

The assets and liabilities as at 30 June 2000 have increased as set out below:2000

$m

AssetsCash and short term liquid assets 143

Investment securities 2,722

Loans, advances and other receivables 53

Unlisted investment in life insurance statutory funds (103)

Other assets 12

Total assets 2,827

LiabilitiesAccounts payable and other liabilities 139

Provisions 71

Outstanding claims and unearned premiums provisions 21

Life insurance policy liabilities 2,363

Policyholder retained benefits 233

Total liabilities 2,827



4 0

3 OPERATING REVENUEConsolidated

2000 1999$m $m

Interest received or due and receivable:

other persons 1,499 1,426

Dividends received or due and receivable:

other persons 57 24

Property income received or due and receivable 6 4

General insurance premium revenue:

direct 788 724

inwards reinsurance - 1

reinsurance and other recoveries revenue 83 115

Life insurance premium revenue:

direct 543 -

reinsurance and other recoveries revenue 11 -

Consolidated entity's interest in earnings of life insurance statutory funds - 25

Changes in net market value of investments integral to general insurance activities:

realised 3 (17)

unrealised 122 56

Changes in net market value of investments integral to life insurance activities:

realised 17 -

unrealised 112 -

Trust distributions received or due and receivable 102 20

Net profits (losses) on trading securities 1 (4)

Net profits (losses) on derivative and other financial instruments:

realised (14) (10)

unrealised 18 17

Fees and commissions received or due and receivable:

other persons 131 116

Writeback of provision for diminution in investment - 6

Other income 21 5

Total operating revenue 3,500 2,508

Disclosed in the profit and loss statement as:

Banking interest income 1,359 1,305

General insurance premium revenue 788 725

Life insurance premium revenue 543 -

Reinsurance and other recoveries revenue 94 115

General insurance investment income 252 200

Life insurance investment income 307 -

Other operating income 157 163

Total operating revenue 3,500 2,508

Banking interest expense (884) (835)

Total operating income 2,616 1,673


4 1


4 OPERATING EXPENSESConsolidated

2000 1999$m $m

Operating profit before abnormals and income tax for the year has been determined after charging the following items:

Interest expense

Interest paid or due and payable:

other persons 884 835

Total interest expense 884 835

Other operating expenses

Staff expenses 290 318

Equipment and occupancy costs 84 101

Total other expenses 230 183

Total other operating expenses 604 602

5 SEGMENT INFORMATION

5(a) Industry segmentsGeneral Life Consolidated

Banking Insurance Insurance Other Eliminations Total$m $m $m $m $m $m

2000 Financial Year

Revenue outside the consolidated entity 1,482 1,125 866 27 - 3,500

Inter-segment revenue 31 5 8 12 (56) -

Total revenue 1,513 1,130 874 39 (56) 3,500

Segment operating result before income tax, amortisation of goodwill and abnormal items 229 211 75 7 (2) 520

Segment assets 21,225 3,238 2,948 34 (1,226) 26,219

1999 Financial Year

Revenue outside the consolidated entity 1,417 1,035 34 22 - 2,508

Inter-segment revenue 24 13 12 13 (62) -

Total revenue 1,441 1,048 46 35 (62) 2,508

Segment operating result before income tax, amortisation of goodwill and abnormal items 157 169 251 5 - 356

Segment assets 19,809 3,406 127 24 (1,882) 21,484

1 In the prior year the consolidated entity's interest in the operating result of the life insurance business was recognised net ofincome tax of $34 million.


4 2


5 SEGMENT INFORMATION (continued)

5(a) Industry segments (continued)The industry segments derive revenue from the following activities:

Banking Banking, finance and other services.

General insurance General insurance.

Life Insurance Life insurance funds and superannuation administration services.

Other Funds management, financial planning, funds administration, and property management services.

5(b) Geographic segmentsThe consolidated entity operates predominantly within Queensland, New South Wales and Victoria.

5(c) Contribution to operating profit from banking activitiesConsolidated

2000 1999$m $m

Net interest income

Interest income 1,395 1,321

Interest expense (920) (851)

475 470

Other operating income

Dividends received or due and receivable:

other persons - 1

Net profits (losses) on trading and investment securities 1 (3)

Net profits (losses) on derivative and other financial instruments:

realised (14) (10)

unrealised 18 17

Fees and commissions received or due and receivable:

controlled entities - 24

other persons 97 84

Other income 16 7

118 120

Total operating income 593 590

Operating expenses

Staff expenses (183) (218)

Occupancy expenses (29) (35)

Computer expenses (46) (62)

Other operating expenses (80) (98)

(338) (413)

Net operating profit before bad and doubtful debts 255 177

Bad and doubtful debts expense (26) (20)

Contribution to operating profit from banking activities before income tax, amortisation of goodwill and abnormal items 229 157

Segment information set out above includes transactions that have been eliminated in the consolidated profit and loss statement.


4 3



5(d) Contribution to operating profit from general insurance activities


$m $m

Net premium revenue

premium revenue 788 725

outwards reinsurance expense (49) (40)

739 685

Net incurred claims

claims expense (684) (655)

reinsurance and other recoveries revenue 83 115

(601) (540)

Operating expenses

acquisition costs (81) (65)

other underwriting expenses (97) (111)

(178) (176)

Underwriting result (40) (31)

Investment revenue - Insurance provisions

Interest, dividends, rent, etc 122 142

Realised gains (losses) on investments 3 (40)

Unrealised gains (losses) on investments 21 (1)

146 101

Insurance trading result 106 70

Other revenue 7 3

Investment revenue - Shareholder reserves

Interest, dividends, rent, etc 31 25

Realised gains on investments - 16

Unrealised gains on investments 70 56

Other revenue 5 7

Other expenses (8) (8)

98 96

Contribution to operating profit from general insurance activities before income tax, amortisation of goodwill and abnormal items 211 169




4 4


5(e) Contribution to operating profit from life insurance activities NotConsolidated Consolidated

2000 1999$m $m

Derivation of interest in earnings of life insurance statutory fundsNet premium revenue:

premium revenue 543 572outwards reinsurance expense (14) (12)

529 560

Investment income:equity securities 188 124debt securities 66 54property 55 36other (2) (5)

307 209

Other income 12 20

Total income 848 789

Claims expense (486) (601)Reinsurance recoveries 11 10Increase in policy liabilities (228) (68)Increase in policyholder retained benefits (3) (1)Administration expenses - life insurance activities

Policy acquisition:commission (5) (4)other (20) (18)Policy maintenance:commission (2) (2)other (25) (30)Investment management expenses (6) (5)

Administration expenses - non life insurance activities (9) (11)

Total operating expenses (773) (730)

Operating profit before income tax 75 59Income tax expense attributable to operating profit (45) (34)

Contribution to operating profit from life insurance activities before amortisation of goodwill and abnormal items 30 25


In the prior year the consolidated entity's interest in the operating profit from life insurance activities was disclosed as follows:

Consolidated1999

$m

Consolidated entity's interest in earnings of life insurance statutory funds 25Other revenue 21Other expenses (21)

Contribution to operating profit from life insurance activities before income tax, amortisation of goodwill and abnormal items 25


4 5


6 ABNORMAL ITEMSConsolidated

2000 1999$m $m

Stamp duty refund received relating to pre-merger transaction - 12

Income tax effect - -

Expenses relating to pre-merger, including payout of management fee, claim relating to disposed property and stamp duty on lease portfolio acquired - (13)

Income tax effect - 5

Future GST and compensation liability provided within net claims provision - (25)

Income tax effect - 9

- (12)

Summary

Total abnormals - (26)

Total income tax effect - 14

Total - (12)

The abnormal items relate to matters that either can be linked to transactions that occurred prior to the merger of Metway,Suncorp and QIDC in December 1996 or to GST and other tax reform and their consequential impact.

7 DIVIDENDSConsolidated

2000 1999$m $m

Ordinary shares

Fully franked interim dividend paid 67 45

Fully franked final dividend provided 77 45

Subordinated dividend ordinary shares

Fully franked final dividend provided - 20

Converting preference shares Series 2

Current year charge in respect of fully franked base dividend paid - 2

Fully franked base dividend paid 2 3

Current year charge in respect of fully franked base dividend provided - 1

Converting capital notes

Distribution provided 53 58

199 174

The converting capital note distribution is deductible for taxation purposes. It carries no imputation credits.


4 6


7 DIVIDENDS (continued)


$m $m

Franking credits

The amount of dividends that would be fully franked at 34% (1999:36%) after allowing for all tax payable in respect of the current year's profits and the payment of the proposed dividends 136 0


At balance date neither the Company nor any of its

controlled entities had a franking account deficit as

defined in the Income Tax Assessment Act (1997).

There are franking credits available for the subsequent

financial year in the Company's controlled entities.

These credits are available to frank dividends which

upon receipt by the Company will increase its franking

account balance to equal the amount shown above as

the consolidated balance.

Based on current estimates and assumptions the

Company expects to pay fully franked dividends at

current levels for the next 12 months.

With the introduction of the Pay As You Go (PAYG) tax

payment system from 1 July 2000, tax payments

required to be made by group entities over the next 12

months will not necessarily equal the amounts required

to be disclosed above. This is due in part to the deferral

(beyond 30 June 2000) of a proportion of the income

tax liability in respect of the 2000 financial year by

group entities. In addition, tax payments in respect of

the 2001 financial year will be brought forward under

the PAYG system.

8 CONVERTING CAPITAL NOTESConsolidated

2000 1999$m $m

124,000,000 converting capital notes of $4.50 each fully paid (1999: 142,500,000) 558 641

On 1 December 1996, the Company issued converting

capital notes to Queensland Treasury Holdings Pty Ltd.

The notes carry a fixed distribution of 8.7 percent per

annum and they mature on 30 November 2006.

Subject to certain conditions, the notes can be

converted into fully paid ordinary shares, on the basis

of one ordinary share for each note, at any point in

time until maturity.

The State has agreed to convert all outstanding notes

should its shareholding of the Company's ordinary

share capital fall below 15 percent. Following the

Government's sale of exchanging notes the

Government will convert all of the notes by 30 June

2001. This is in line with the undertaking given by the

Government in respect of the EINs Series 2 where an

exchange of one note for one ordinary share will occur

on 31 October 2001.


4 7


9 DIRECTORS' AND SENIOR EXECUTIVES' EMOLUMENTS9(a) Directors' remuneration

Total amount received or due and receivable by directors of the Company for the year ended 30 June 2000 was:

Base Bonus 2 Shares Other Total Retirement TotalEmolument1 Issued3 Compensation4 Compensation Benefits5

$ $ $ $ $ $ $

Executive Director

W S Jones 892,933 606,000 750 9,259 1,508,942 - 1,508,942

Non-Executive Directors

R J Lamble 168,000 - - 11,760 179,760 63,833 243,593

M D E Kriewaldt 151,875 - - 10,631 162,506 84,775 247,281

R F Cormie 108,834 - - 7,618 116,452 59,666 176,118

P A Cross 68,056 - - 4,764 72,820 - 72,820

F C B Haly 80,583 - - 5,641 86,224 22,093 108,317

J J Kennedy 73,167 - - 5,122 78,289 67,667 145,956

J D Story 89,967 - - 6,298 96,265 - 96,265

G A Tomlinson 53,667 - - 3,557 57,224 - 57,224

1 Executive Director's remuneration consists of both basic and packaged benefit components. Non-executive Directors'remuneration represents fees in connection with attending Board, Board committee and subsidiary companies' Board meetings.

2 Reflects amounts accrued but not yet paid in respect of the year ended 30 June 2000.

3 Reflects shares to be issued to employees to the value of $750 in respect of the year ended 30 June 2000.

4 Reflects non-salary package remuneration and includes company contributions to superannuation.

5 The retirement benefit represents the increase in the Provision for Retirement Benefits.


4 8


9 DIRECTORS' AND SENIOR EXECUTIVES' EMOLUMENTS (continued)

9(a) Executive Officers’ remuneration

The following table shows the remuneration of the five most highly remunerated officers of the Company and theconsolidated entity who were officers at 30 June 2000.

Name1 Base Bonus 3 Shares Other Total Options Exercise Strike Date Fair Value Emolument 2 Issued 4 Compen- Compen- Granted Price Price 6 First of each

sation 5 sation during Exercis- option the Year able granted

during theyear 7

$ $ $ $ $ $ $ $

G J Moynihan 440,123 262,985 750 31,620 735,478 30,600 8.11 9.12 31 March 02 0.93

30,600 8.11 9.56 31 March 03 0.82

30,600 8.11 10.05 31 March 04 0.71

A J Hogendijk 477,000 210,555 750 - 688,305

P S Johnstone 369,433 257,707 750 7,067 634,957 21,600 8.11 9.12 31 March 02 0.93

22,000 8.11 9.56 31 March 03 0.82

22,000 8.11 10.05 31 March 04 0.71

M W Blucher 378,158 289,889 750 11,842 680,639 21,000 8.11 9.12 31 March 02 0.93

22,000 8.11 9.56 31 March 03 0.82

22,000 8.11 10.05 31 March 04 0.71

D Wilkie 417,933 219,532 750 7,067 645,282

1 The senior executives are those executives responsible for strategic direction and management during the year.

2 Reflects the total remuneration package consisting of both basic salary and packaged benefit components.

3 Reflects amounts accrued but not yet paid in respect of the year ended 30 June 2000.

4 Reflects shares to be issued to employees to the value of $750 in respect of the year ended 30 June 2000.

5 Reflects non-salary package remuneration and includes company contributions to superannuation.

6 The options are exercisable only if the weighted average price of the Company's shares as quoted on the Australian StockExchange exceeds the prices specified on each of five consecutive trading days between the issue date of the option and therespective exercise dates.

7 The fair value of options granted during the year has been determined using the industry standard Black-Scholes option-pricingmodel. This is not a market price but an estimate of the fair value as these options are not traded. This valuation takes intoaccount the price at grant date, the exercise price, the expected life of the option, the volatility in price of the underlying stockand expected dividends.

Note: Other individuals who are rewarded under incentive-based systems according to results, consistent with market practicewithin the industry, may within any given year receive remuneration at a level in excess of that received by some executivesshown above.


4 9


10 OPTIONS

At the date of this report unissued ordinary shares of the Company under the Executive Option Plan are:

Issue date Start Expiry Exercise Strike No of options No of options Fair valueof option Date Date price of Price held at 30 held at 30 of each option

option 1 June 2000 2 June 1999 granted duringthe year 3

$ $ $

26 Mar 1997 6 Jul 1999 26 Mar 2002 5.51 6.00 650,000 650,000

26 Mar 1997 6 Jul 2000 26 Mar 2002 5.51 6.50 700,000 700,000

26 Mar 1997 6 Jul 2001 26 Mar 2002 5.51 7.00 650,000 650,000

10 Sep 1997 31 Mar 2000 10 Sep 2002 6.79 7.00 196,000 196,000

10 Sep 1997 31 Mar 2001 10 Sep 2002 6.79 7.50 197,000 197,000

10 Sep1997 31 Mar 2002 10 Sep 2002 6.79 8.00 197,000 197,000

17 Dec 1997 31 Mar 2000 17 Dec 2002 7.19 7.00 40,000 40,000

17 Dec 1997 31 Mar 2001 17 Dec2002 7.19 7.50 40,000 40,000

17 Dec 1997 31 Mar 2002 17 Dec 2002 7.19 8.00 40,000 40,000

15 Jan 1998 15 July 2000 15 Jan 2003 7.56 7.56 250,000 250,000

16 Dec 1998 16 Jun 2001 16 Dec 2003 7.96 9.00 119,500 119,500

16 Dec 1998 16 Jun 2002 16 Dec 2003 7.96 9.50 121,000 121,000

16 Dec 1998 16 Jun 2003 16 Dec 2003 7.96 10.00 122,000 122,000

3 Jun 1999 3 Nov 2001 3 Jun 2004 8.81 9.75 116,667 116,667

3 Jun 1999 3 Nov 2002 3 Jun 2004 8.81 10.25 116,667 116,667

3 Jun 1999 3 Nov 2003 3 Jun 2004 8.81 10.75 116,666 116,666

3 Jun 1999 3 Nov 2001 3 Jun 2004 8.81 9.75 13,334 13,334

3 Jun 1999 3 Nov 2002 3 Jun 2004 8.81 10.25 13,333 13,333

3 Jun 1999 3 Nov 2003 3 Jun 2004 8.81 10.75 13,333 13,333

6 Oct 1999 31 Mar 2002 6 Oct 2004 8.11 9.12 73,200 0.93

6 Oct 1999 31 Mar 2003 6 Oct 2004 8.11 9.56 74,600 0.82

6 Oct 1999 31 Mar 2004 6 Oct 2004 8.11 10.05 74,600 0.71

3,934,900 3,712,500

1 The exercise price of option was the weighted average market price of the Company's shares in the week preceding thedispatch of the offer.

2 Subsequent to balance date no options were exercised.

3 The fair value of options granted during the year has been determined using the industry standard Black-Scholes option-pricingmodel. This is not a market price, but an estimate of the fair value as these options are not traded. This valuation takes intoaccount the price at grant date, the exercise price, the expected life of the option, the volatility in price of the underlying stockand expected dividends.

There were no options exercised during the year. No options have been granted since the end of the financial year. All optionsexpire on the earlier of their expiry date or termination of the employee's employment. In addition to those options shown above,35,000 options issued during the year expired in respect of employees who resigned. No other options expired during the yearended 30 June 2000.

The market price of the Company's shares at 30 June 2000 was $8.62.

5 0

Directors’ Declaration

In the opinion of the directors of Suncorp-Metway Ltd the accompanying Concise Financial Report of the

consolidated entity, comprising Suncorp-Metway Ltd and its controlled entities, for the year ended 30 June 2000 set

out on pages 32 to 49:

a) has been derived from or is consistent with the Consolidated Financial Report for the financial year; and

b) complies with Accounting Standard AASB 1039 "Concise Financial Reports".

Dated at Brisbane this 31st day of August 2000

Signed in accordance with a resolution of the directors:

R John Lamble AO W Steven Jones

Chairman Managing Director


5 1

Independent Audit Report on Concise Financial Report to the members of Suncorp-Metway Ltd

Scope

We have audited the Concise Financial Report of Suncorp-Metway Ltd and its controlled entities for the financial

year ended 30 June 2000 consisting of the profit and loss statement, balance sheet, statement of cash flows,

accompanying notes (1 to 10), and the accompanying discussion and analysis on the profit and loss statement,

balance sheet and statement of cash flows, (set out on pages 32 to 49) in order to express an opinion on it to the

members of the Company. The Company's directors are responsible for the Concise Financial Report.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance

whether the Concise Financial Report is free of material misstatement. We have also performed an independent

audit of the Consolidated Financial Report of Suncorp-Metway Ltd and its controlled entities for the year ended 30

June 2000. Our audit report on the Consolidated Financial Report was signed on 31 August 2000, and was not

subject to any qualification.

Our procedures in respect of the audit of the Concise Financial Report included testing that the information in the

Concise Financial Report is consistent with the Consolidated Financial Report and examination, on a test basis, of

evidence supporting the amounts, discussion and analysis, and other disclosures which were not directly derived

from the Consolidated Financial Report. These procedures have been undertaken to form an opinion whether, in all

material respects, the Concise Financial Report is presented fairly in accordance with Accounting Standard AASB

1039 "Concise Financial Reports" issued in Australia.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion the Concise Financial Report of Suncorp-Metway Ltd and its controlled entities for the year ended 30

June 2000 complies with AASB 1039 "Concise Financial Reports".

KPMG

Ian H Fraser

Brisbane 31 August 2000 Partner


5 2

MAJOR SHAREHOLDERS

At 18 August 2000, the 20 largest holders of fully paid Ordinary Shares held 82,416,722 shares, equal to 25.63percent of the total fully paid shares on issue.

Number of Shares %

Queensland Treasury Holdings Pty Ltd 18,500,000 5.76

Chase Manhattan Nominees Limited 13,352,040 4.15

Permanent Trustee Australia Limited 7,842,694 2.44


AMP Life Limited 4,693,899 1.46

Westpac Custodian Nominees Limited 4,509,640 1.40

National Nominees Limited 3,510,099 1.09

Perpetual Nominees Limited 3,322,726 1.03


Australian Foundation Investment Company Limited 2,746,197 0.85

Salomon Smith Barney Australia Nominees No 2 Pty Ltd 1,850,000 0.58

MLC Limited 1,708,635 0.53

Zurich Australia Limited 1,678,901 0.52

Citicorp Nominees Pty Limited 1,629,708 0.51



Commonwealth Custodial Services Limited 1,378,011 0.43


CSS Board 1,192,574 0.37

Labor Holdings Pty Ltd 1,096,428 0.34

82,416,722 25.63

Substantial Shareholders

At 18 August 2000, the following entries were contained in the register of substantial shareholdings, based onSubstantial Holding Notices received:

Number of Shares

Commonwealth Bank of Australia Group Companies 27,724,794

The State of Queensland 18,500,000

Permanent Trustee Company Limited 12,834,688


Shareholder & Noteholder Information

5 3


DISTRIBUTION OF SHAREHOLDINGS

(i) Fully paid Ordinary Shares at 18 August 2000:

Range

Number of % of Number of % of Holders Holders Shares Shares

1-1,000 shares 62,499 64.80 32,438,423 10.09

1,001-5,000 shares 24,956 25.88 61,752,258 19.21

5,001-10,000 shares 5,431 5.63 38,354,603 11.93

10,001-100,000 shares 3,400 3.53 71,408,186 22.22

100,001- shares and over 160 .16 117,461,764 36.55

96,446 100.00 321,415,234 100.00

(ii) Non-participating shares

All shares of this class are fully paid shares and are held by the Trustee of the Metropolitan Permanent BuildingSociety Trust, Permanent Trustee Australia Limited.

(iii) Partly paid Ordinary Shares at 18 August 2000:

Number of % of Number of % of Holders Holders Shares Shares

1-1,000 shares 8 38.10 5,400 11.70

1,001- 5,000 shares 11 52.38 27,950 60.56

5,001- 10,000 shares 2 9.52 12,800 27.74

10,001-100,000 shares - - - -

100,001- shares and over - - - -

21 100.00 46,150 100.00

VOTING RIGHTS OF SHAREHOLDERS

(i) Ordinary Shares

The fully paid ordinary shareholders are entitled to vote at any meeting of the members of the Company and theirvoting rights are on:

• show of hands - one vote per shareholder; and

• poll - one vote per fully paid ordinary share

(ii) Non-participating Shares

The non-participating shareholder has an entitlement to vote only in certain circumstances.


5 4


HOLDERS OF NON-MARKETABLE PARCELS

At 18 August 2000 the number of shareholders with less than a marketable parcel for fully paid Ordinary Shares (1-56 shares) was 281 (0.29 percent of shareholders) representing 8,373 shares.

Major Noteholders

At 18 August 2000, the 20 largest holders of Exchanging Instalment Notes Series 2 held 27,968,331 notes, equal to19.62 per cent of the total notes on issue.

Number of Notes %

Brispot Nominees Pty Ltd 7,299,638 5.12

Chase Manhattan Nominees Limited 3,726,232 2.61

Queensland Investment Corporation 2,070,000 1.45

Perpetual Nominees Limited 1,935,788 1.36

National Nominees Limited 1,671,931 1.17

AMP Nominees Pty Limited 1,226,361 0.86

Commonwealth Custodial Services Limited 1,081,481 0.76

Tower Trust Limited 1,039,963 0.73

Permanent Trustee Australia Limited 943,059 0.66

Westpac Custodian Nominees Limited 938,040 0.66

Milton Corporation Ltd 880,000 0.62

AMP Life Limited 836,631 0.59

Citicorp Nominees Pty Limited 759,885 0.53

Questor Financial Services Limited 740,550 0.52

Permanent Trustee Australia Limited 678,281 0.48

BT Custodial Services Pty Ltd 525,079 0.37

AMCS Nominees Pty Ltd 486,951 0.34

The Australian National University 400,000 0.28

BT (Queensland) Pty Limited 385,590 0.27

Perpetual Nominees Limited 342,871 0.24

27,968,331 19.62

Substantial Noteholders

At 18 August 2000, there were no entries contained in the register of substantial unitholdings for ExchangingInstalment Notes Series 2.


5 5


DISTRIBUTION OF NOTEHOLDINGS

Exchanging Instalment Notes Series 2 at 18 August 2000:

Range Number of % of Number of % of Holders Holders Notes Notes

1-1,000 notes 122,109 87.24 43,123,843 30.26

1,001-5,000 notes 15,513 11.08 36,444,925 25.58

5,001-10,000 notes 1,571 1.12 11,640,030 8.17

10,001-100,000 notes 720 0.52 16,802,764 11.79

100,001-notes and over 56 0.04 34,488,438 24.20

139,969 100.00 142,500,000 100.00

VOTING RIGHTS OF NOTEHOLDERS

Noteholders of Exchanging Instalment Notes Series 2 are not entitled to vote at any meeting of the members of theCompany as the Notes do not carry any voting rights.

HOLDERS OF NON-MARKETABLE PARCELS

At 18 August 2000 the number of holders with less than a marketable parcel (1-91 notes) was 124 (0.08 percent ofholders) representing 4,011 notes.


Key Dates*

5 6

Ordinary Shares (SME)

Dividend payment (final) 13 October 2000

Ex-Dividend (interim) 5 March 2001

Record (interim) 9 March 2001

Dividend payment (interim) 30 March 2001

Floating Rate Capital Notes (SMEHB)

Ex interest 9 November 2000

Record 15 November 2000

Interest payment 30 November 2000

Ex interest 9 February 2001

Record 15 February 2001

Interest payment 2 March 2001

Ex interest 9 May 2001

Record 15 May 2001

Interest payment 30 May 2001

Exchanging Instalment Notes Series 2 (SMPG)

Last day for trading of partly paid notes 23 October 2000

Ex date for 30 November interest payment 24 October 2000

Last day for processing of off-market transfers of notes on Partly paid basis 30 October 2000

Final Instalment payment ($3.10) due date 6 November 2000

Record date for interest payment 15 November 2000

Interest payment 30 November 2000

Ex interest 10 May 2001

Record date for interest 16 May 2001

Interest payment 31 May 2001

Shareholder Information

Registered OfficeLevel 18, 36 Wickham Terrace Brisbane Qld 4000 Telephone: (07) 3835 5355 Fascimile: (07) 3836 1190Information about Suncorp Metway is also available on theinternet at www.suncorpmetway.com.au

Company SecretaryClifford R Chuter

Annual General MeetingThe Annual General Meeting will be held in the Great Hall,Brisbane Convention and Exhibition Centre, cornerMerivale and Glenelg Streets, South Brisbane onWednesday 1 November 2000 at 2.30pm.Share and Note RegistryShareholders and noteholders can obtain informationabout their share and note holdings by contacting theCompany’s share registry:Douglas Heck & BurrellLevel 22, 300 Queen Street Brisbane Qld 4000Telephone: (07) 3228 4219 Facsimile: (07) 3221 3149Email: [email protected] address: Locked Bag 568, Brisbane, Qld. 4001When seeking information shareholders and noteholdersmust provide their Security Reference Number (SRN) ortheir Holder Identification Number (HIN) which arerecorded on their shareholder/noteholder statements.

Change of AddressShareholders sponsored by Suncorp Metway (issuersponsored) or EIN – Series 2 Noteholders sponsored by theState of Queensland, must advise Douglas Heck & Burrellin writing, appropriately signed, of the amended details.Change of address forms can be obtained from ourinternet site.

Shareholders or Noteholders sponsored by a broker (brokersponsored) should not advise the registry but advise theirbroker in writing of the amended details.

Payment of Dividends/InterestShareholders or Noteholders who wish to have theirdividends/interest paid directly into their bank, buildingsociety or credit union account should obtain a directcredit application form from the share registry or from ourinternet site.

Removal from Annual Report mailing listShareholders or Noteholders who no longer wish toreceive a Concise Report or a Full Annual report shouldadvise the share registry in writing, by fax, telephone or byemail, quoting their SRN or HIN. Forms are available onour internet site.

Stock Exchange Listed SecuritiesSuncorp Metway’s securities listed on the Australian StockExchange are:Ordinary Shares (code SME)Floating Rate Capital Notes (SMEHB)Exchanging Instalment Notes - Series 2 (SMPG), issued bythe Queensland Government

*Dates may be subject to change

Internet Site

Suncorp Metway’s internet site,

http://www.suncorpmetway.com.au provides information

on banking, insurance and investment products and services,

sponsorships, financial results, company and shareholder

information. You can apply on line for a transaction account,

credit card, home, investment property or small business loan,

share loan or personal finance loan. Or get a quote for your

home or car insurance.

You can also use On Line Access for your everyday banking.

Annual Report

Copies of the full annual report (which includes the concise

report and consolidated financial statements) can be obtained

from Investor Relations (07) 3835 5797 or through our

internet site: www.suncorpmetway.com.au. Our site also

includes our half year results and profit announcements.

Publications/Announcements

Should you wish to receive our publications and

announcements by email as they are released, you can make

this request through the Investor Information section on our

internet site: www.suncorpmetway.com.au.

Contact us

General enquiries 13 11 55

Quickcall phone banking 13 11 25

Insurance sales and enquiries 13 11 55

Insurance claims 13 25 24

New loan hotline 13 11 34

New investment account hotline 13 27 44

Lost or stolen cards & passbooks 1800 775 020

Life insurance, superannuation,

financial planning 1800 451 223

Investment funds enquiries centre 1800 067 732

Business banking service centre 1300 65 11 25

Small Business banking 1300 65 11 25

INSURANCE BANKING I NVESTMENT

INSURANCE BANKING I NVESTMENT

Documents

INSURANCE BANKING INVESTMENT - Suncorp Group · 2018. 5. 21. · Banking 229 157 45.9 General insurance 211 169 24.9 Life insurance (after tax and excluding policyholders’ interests)